How can we expedite foreclosure on our home?
Dear Liz: Is there any way to expedite the foreclosure process? My wife bought a townhome shortly before we were married. Long story short, it didn’t fit our family once we got married and had a baby. We bought a larger house and tried renting the townhome but couldn’t cover the mortgage payment. We attempted a short sale, but the bank refused a good offer, so we let it go into default. We even offered to do a deed in lieu of foreclosure, but the bank refused unless we provided financial information for me, too. Since I’m not named on the mortgage and wasn’t even around when she got the loan, I refused. We’ve mentally and financially prepared for foreclosure and now just want the process complete. The bank, though, doesn’t seem to be in any kind of hurry. The process is now entering the third year with no action on their part, and we haven’t even been to the property in well over a year. We’ve told them expressly that we aren’t fighting them on the foreclosure. At this point we just want to move on.
Answer: Offering a deed in lieu of foreclosure — in which your wife hands over the keys in return for being released from the loan — was probably your best bet to speed things along. If you don’t want to provide the financial information the mortgage company is requesting, you’re stuck with waiting this out. It’s unfortunate, because many lenders prefer deeds in lieu as a cheaper, faster way to get control of properties they’re going to wind up with anyway. The idea is that the homes probably will be in better condition than if an angry borrower or squatter trashes them, plus the costs of formal foreclosures are avoided. As foreclosure times have lengthened, some lenders have even sent out letters to underwater homeowners in default urging them to consider a deed in lieu transfer.
One thing you should investigate is whether the lender can come after your wife for a “deficiency judgment.” If it is allowed in your state, your wife could be liable for any leftover debt that isn’t paid off with a foreclosure sale. Talk to an attorney familiar with credit and foreclosure laws in your state.
Liz Weston is “The most-read personal finance columnist on the Internet” (Nielsen/NetRatings) and author of “The 10 Commandments of Money” and “Your Credit Score.”