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Re: At the appraisal stage in the deed in lieu process and have a question

Posted by Ward-CA- on November 05, 2001 at 8:19 PM

In Reply to: At the appraisal stage in the deed in lieu process and have a question posted by teacher in MS on November 05, 2001 at 6:54 PM

: The mortgage company is sending an appraiser and they will be here tomorrow to appraise the property for a possible deed in lieu. We sent in all the other info., hardship letter and financial package. The mortgager says after they have the appraisal they will have an answer for us on whether they can do the deed in lieu. Does the appraisal have a lot to do with it??
: I read somewhere in my research about this that if the property has current equity then a deed in lieu might not be accepted. Is that true?? I mean we don't have much equity we owe around 96,000 and the last appraisal we had 6 or 7 years ago was 103,000.00. Is that too much?? What could happen?? They are going to get the house either way. I don't understand.

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Sure, the fair market value of your property is of interest to your lender. It helps them determine the pros and cons of taking your property now versus betting they’ll get paid off completely months from now, at their foreclosure sale.

If I were your lender I’d do the deed-in-lieu right now. It appears that there’s just enough gross equity in the property for them to walk away whole upon their resale of it. If they can sell the property for about $108,000 and pay a 6% real estate commission and about 2% transactional expenses and spend about $2,000 to $3,000 for some cosmetic fix-up they’d be left with that $96,000 figure, which is just the amount they need to pay off their loan.

They can’t do any better than that at their foreclosure sale, no matter how much more the bidding goes above their note balance. And with our national economy looking weaker and weaker, getting your property on the market and sold now is going to be a lot easier now than months from now.

Good luck.


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