- 1). Locate a foreclosure prevention counselor. The U.S. Department of Housing and Urban Development website allows you to search for a certified counselor based on location. Counselors can answer any questions you have about foreclosure, your rights or the deed in lieu of foreclosure process. A counselor can also review your eligibility for a deed in lieu and negotiate with your lender to facilitate the transfer. Consumer Credit Counseling Services locations are listed throughout Minnesota as approved agencies.
- 2). Call your lender. It's up to your lender whether or not to consider a deed in lieu of foreclosure. Generally, the amount you owe, the value of the home and your income are all determining factors. Certain lenders require you to place the home on the market before considering a deed in lieu.
- 3). Inquire about your eligibility for the Home Affordable Foreclosure Alternatives program. If your lender is a participating lender, you may be able to receive relocation funds in exchanging for completing the deed in lieu of foreclosure. You can find lender information on the Making Home Affordable website. For example, CU Companies and Wachovia are listed as participating lenders in Minnesota.
- 4). Submit updated financial documents. Your lender needs copies of your recent bank statements, pay stubs and income from all other sources. Unearned income, such as child support and public assistance benefits, are also taken into consideration.
- 5). Write a hardship letter. Specific requirements for requesting a deed in lieu may vary, depending on the bank. You likely need to prove that you encountered a hardship beyond your control that's affecting your ability to pay the mortgage
- 6). Wait for a response. Your lender reviews all documents to determine if the deed in lieu will be approved. The lender may need to schedule an appraisal as well.
- 7). Sign and notarize the agreement. If the lender accepts the request, you're mailed an agreement outlining the terms and conditions of the deed in lieu. As long as you don't object, return the paperwork. Once the lender receives your signed agreement, the release papers are prepared.
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