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Lindon Utah Foreclosure Lawyer

Foreclosure Lawyer Lindon Utah

Lindon is a city in Utah County, Utah, United States. It is part of the Provo–Orem, Utah Metropolitan Statistical Area. The population was 10,070 at the 2010 census. In July 2018 it was estimated to be to 10,970 by the US Census Bureau. Lindon has an abundant cultural and historical background. Originally settled in 1861, Lindon began as pioneers moved into what was then the Lindon grazing land. The town was originally named “String Town” because of the way the houses were strung up and down the street between the towns of Orem and Pleasant Grove. An old linden tree (Tilia) growing in town in 1901 inspired the present (misspelled) name. Over the past century Lindon has seen organized development, but it has tried to remain true to its motto: “Lindon: a little bit of country”.

Short Sales vs. Deeds in Lieu of Foreclosure

If you’re having trouble making your mortgage payments and the loan holder (the bank) has denied your request for a repayment plan, forbearance, or loan modification or if you’re not interested in any of those options two other ways to avoid a foreclosure are completing a short sale or a deed in lieu of foreclosure. One benefit to these options is that that you won’t have a foreclosure on your credit history. But your credit score will still take a major hit. A short sale or deed in lieu of foreclosure is almost as bad as a foreclosure when it comes to credit scores. For some people, though, not having the stigma of a foreclosure on their record is worth the effort of working out one of these alternatives.

Short Sales

A short sale occurs when a homeowner sells his or her home to a third party for less than the total debt remaining on the mortgage loan. With a short sale, the bank agrees to accept the proceeds from the sale in exchange for releasing the lien on the property.

The bank’s loss mitigation department must approve the short sale before the transaction can be completed. (The process of finding a way to avoid foreclosure is called “loss mitigation.”) To get approval for a short sale, the seller (the homeowner) must contact the loan servicer—the company that manages the loan account—to ask for a loss mitigation application. The homeowner then must send the servicer a complete application, which usually includes:
• a financial statement, in the form of a questionnaire, that provides detailed information regarding monthly income and expenses
• proof of income, if applicable
• most recent tax returns
• bank statements (usually two recent statements for all accounts), and
• a hardship affidavit or statement.
• The purchase offer. A short sale application will also most likely require that you include an offer from a potential purchaser. Banks often insist that there be an offer on the table before they will consider a short sale, but not always.

• A second mortgage holder must agree to the short sale. If there is more than one mortgage on the property, both mortgage holders must consent to the short sale. The first mortgage holder will offer a certain amount from the short sale proceeds to second mortgage holder to release their lien, but the second mortgage holder can refuse to accept the amount and kill the deal.

Deficiency Judgments Following Short Sales

Many homeowners who complete a short sale will face a deficiency judgment, though a few states disallow them after this kind of transaction. The difference between the total debt and the sale price is called a “deficiency.” For example, say your bank gives you permission to sell your property for $200,000, but you owe $250,000. The deficiency is $50,000. In many states, the bank can seek a personal judgment against you after the short sale to recover the deficiency amount.

While many states have enacted legislation that prohibits a deficiency judgment following a foreclosure, most states do not have a corresponding law that would prevent a deficiency judgment following a short sale.
How to avoid a deficiency with a short sale
To ensure that the bank can’t get a deficiency judgment against you following a short sale, the short sale agreement must expressly state that the transaction is in full satisfaction of the debt and that the bank waives its right to the deficiency.

If the bank forgives some or all of the deficiency and issues you a IRS Form 1099-C, you might have to include the forgiven debt as taxable income.
When It Might Be a Good Idea to Let a Foreclosure Happen and Other Issues to Consider

In some states, a bank can get a deficiency judgment against a homeowner as part of a foreclosure or thereafter by filing a separate lawsuit. In other states, state law prevents a bank from getting a deficiency judgment following a foreclosure. If the bank can’t get a deficiency judgment against you after a foreclosure, you might be better off letting a foreclosure happen rather than doing a short sale or deed in lieu of foreclosure that leaves you on the hook for a deficiency. For specific advice about what to do in your particular situation, talk to a local foreclosure attorney. Also, you should take into consideration how long it will take to get a new mortgage after a short sale or deed in lieu versus a foreclosure. Fannie Mae, for instance, will buy loans made two years after a short sale or deed in lieu if there are extenuating circumstances, like divorce, medical bills, or a job layoff that caused you economic difficulty, compared to a three-year wait after a foreclosure. (Without extenuating circumstances, the waiting period for a Fannie Mae loan is seven years after a foreclosure or four years after a short sale or deed in lieu.) On the other hand, the Federal Housing Authority (FHA) treats foreclosures, short sales, and deeds in lieu the same, usually making its home loan insurance available after three years.

Deeds in Lieu of Foreclosure

Another way to avoid a foreclosure is by completing a deed in lieu of foreclosure. A deed in lieu of foreclosure is a transaction in which the homeowner voluntarily transfers title to the property to the bank in exchange for a release from the mortgage obligation. Generally, the bank will only approve a deed in lieu of foreclosure if there aren’t any other liens on the property.

You Might Want to Complete a Deed in Lieu of Foreclosure

Because the difference in how a foreclosure or deed in lieu affects your credit is minimal, it might not be worth completing a deed in lieu unless the bank agrees to:
• forgive or reduce the deficiency
• give you some cash as part of the deal, or
• give you some additional time to live in the home (longer than what you’d get if you let the foreclosure go through).
Banks sometimes agree to these terms to avoid the expense and hassle of foreclosing.
If you have a lot of equity in the property, however, a deed in lieu is usually not a good way to go. In most cases, you’ll be better off by selling the home and paying of the debt. If a foreclosure is imminent and you don’t have much time to sell, you might consider filing for Chapter 13 bankruptcy with a plan to sell your property.

Just like with a short sale, the first step in obtaining a deed in lieu of foreclosure is for the borrower to contact the servicer and request a loss mitigation application. As with a short sale request, the application will need to be filled out and submitted along with documentation about income and expenses. The bank might require that you try to sell your home before it will consider accepting a deed in lieu, and require a copy of the listing agreement as proof that this has been done.

Deed in Lieu of Foreclosure Documents

If approved for a deed in lieu of foreclosure, the bank will send you documents to sign. You will receive:
• a deed that transfers ownership of the property to the bank, and
• an estoppel affidavit. (Sometimes there might be a separate deed in lieu agreement.)
The estoppel affidavit sets out the terms of the agreement and will include a provision that you are acting freely and voluntarily. It might also include provisions addressing whether the transaction is in full satisfaction of the debt or whether the bank has the right to seek a deficiency judgment.
Deficiency Judgments Following a Deed in Lieu of Foreclosure
With a deed in lieu of foreclosure, the deficiency amount is the difference between the fair market value of the property and the total debt. In most cases, completing a deed in lieu will release the borrowers from all obligations and liability under the mortgage, but not always.

Anti-deficiency laws

Most states don’t have a law that prevents a bank from obtaining a deficiency judgment following a deed in lieu of foreclosure. Washington, however, is one state that does prohibit a bank from getting a deficiency judgment after a deed in lieu. So, the bank might try to hold you liable for a deficiency following the transaction. If the bank wants to preserve its right to seek a deficiency judgment, it generally must clearly state in the transaction documents that a balance remains after the deed in lieu, and it must include the amount of the deficiency.
How to avoid a deficiency with a deed in lieu of foreclosure
To avoid a deficiency judgment with a deed in lieu of foreclosure, the agreement must expressly state that the transaction is in full satisfaction of the debt. If the deed in lieu of foreclosure agreement does not contain this provision, the bank might file a lawsuit to obtain a deficiency judgment. Again, you might have tax liability for any forgiven debt.

The process for completing a deed in lieu will vary somewhat depending on who your loan servicer is and who the lender (or current owner of your loan, called an “investor”) is. Generally, you’ll have to try to sell the property for at least 90 days at fair market value before the lender will consent to accepting a deed in lieu. Also, you usually must have clear title, which means there can’t be other liens on the property. You might have to provide details about your finances and show that the home won’t sell for what’s owed. As part of the deal, the homeowner usually agrees to vacate the home, leaving it in good (“broom swept”) condition, and sign over ownership to the lender. In some cases, the borrower will have to submit an affidavit indicating that the process was voluntary. In some cases, the lender will allow the homeowner to rent the home even after turning over the deed. Fannie Mae, for example, offers this option to borrowers who have Fannie Mae loans. Also, in some cases, the departing homeowner will receive relocation money after completing a deed in lieu.

Call A Foreclosure Lawyer

Some people think that completing a deed in lieu will cause less damage to their credit score than a foreclosure. But the difference in how a foreclosure or deed in lieu affects your credit is minimal. For this reason, it might not be worth doing a deed in lieu unless the lender agrees to forgive or reduce the deficiency, you get some cash as part of the deal, or you get some extra time to live in the home (longer than what you’d get if you let the foreclosure go through). In some cases, the lender will agree to one or more of these conditions to avoid the expense and hassle of foreclosing. Also, you should take into consideration how long it will take to get a new mortgage after a deed in lieu versus a foreclosure. Fannie Mae, for instance, will buy loans made two years after a deed in lieu if there are extenuating circumstances, like divorce, medical bills, or a job layoff that caused you economic difficulty, compared to a three-year wait after a foreclosure. (Without extenuating circumstances, the waiting period for a Fannie Mae loan is seven years after a foreclosure or four years after a deed in lieu.) On the other hand, the Federal Housing Authority (FHA) treats foreclosures, short sales, and deeds in lieu the same, usually making its home loan insurance available after three years. If you have a lot of equity in the property, however, a deed in lieu is usually a poor choice. You’d be better off by selling the property and paying of the debt. If you don’t have a lot of time and a foreclosure is imminent, you might consider filing for Chapter 13 bankruptcy with a plan to sell your home.

With a deed in lieu, the homeowner may negotiate what will happen to the deficiency, if one exists. Because a deed in lieu is a voluntary agreement between you and the lender, it’s possible to negotiate a deal in which:
• the lender agrees not to pursue a deficiency judgment
• you agree pay part of the deficiency, or
• you agree to repay the deficit over time.
Be aware that, if the lender forgives all or part of the deficiency, you might face tax consequences.
Should You Let the Foreclosure Go Through?
In some states, a bank can get a deficiency judgment against a homeowner as part of a foreclosure or thereafter by filing a separate lawsuit. In other states, an anti-deficiency law prevents a bank from getting a deficiency judgment following a foreclosure. If the bank can’t get a deficiency judgment against you after a foreclosure, you might be better off letting a foreclosure happen rather than agreeing to a deed in lieu of foreclosure that leaves you responsible for all or a portion of a deficiency. (For specific advice about what to do in your particular situation, talk to a local foreclosure attorney.)

If you’re considering completing a deed in lieu, consider talking to a lawyer. Many different foreclosure avoidance options exist, including loan modifications and short sales, and some options might be better than others, especially for specific situations. To find out if a deed in lieu might be right for you or to explore other possible options, contact a lawyer.

Avoiding a Deficiency Judgment

In some states, lenders have the right to sue borrowers for deficiencies after a foreclosure or a deed in lieu of foreclosure. A deficiency is the difference between the amount you owe on your mortgage loan and the price your lender gets for your home when it sells at a foreclosure sale. In other words, if you owe your mortgage lender $300,000 on your house and you default, and the foreclosure sale brings in just $250,000, the deficiency is $50,000. If permitted by state law, the lender can sue you for the $50,000 and get a deficiency judgment—even though it already took the house. With a deed in lieu of foreclosure, the deficiency is the difference between the total debt and the fair market value of the house. As part of the deed in lieu of foreclosure negotiations, you should get your lender to agree to release you from having to repay any deficiency, perhaps in exchange for your agreeing to deliver the house to your lender in good condition. Make sure to get the deficiency waiver in writing. Though, if the lender forgives all or part of the deficiency, you could face tax consequences.

Know Your Options

If you are a distressed homeowner who’s facing a foreclosure, knowing your options is very important. As soon as you realize that you’re in financial distress, call your servicer’s loss mitigation department to find out what alternatives to foreclosure—such as a refinance, loan modification, short sale, or deed in lieu of foreclosure—are available to you. (The servicer is the company that manages your loan account on behalf of the lender. Servicers process borrower payments, manage escrow accounts, and pursue foreclosure for defaulted loans.) You have nothing to lose by calling the servicer and the call might make a huge difference. You will typically be provided a packet of information and documents to complete. If you don’t understand the contents of any of these documents, ask for help, either from an attorney or a free HUD-certified housing counselor. While the foreclosure process can be scary, you have some choice in the matter.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.