Some people who walk away from their homes in lieu of foreclosure may face costly, and legal, ramifications that may haunt them for years.
Over and over again you hear on the news that many people, frustrated with their inability to make their mortgage payments and seeing no way out of the mess they are in, are simply walking away from their homes. They feel helpless and hopeless. They are tired of struggling to keep their homes and many have given up. They are walking away from their homes in record numbers.
Walking away from your home may be what you have to do, but their are some things that you should know. Even if you make an agreement with your lender to give back a deed in lieu of foreclosure, until the deed is recorded granting your name off of the title to the property, you may still be held liable for the property.
Many people who walk away thinking that, other than the actual foreclosure being on their record, they were relieved of any future liabilities have found that this is not necessarily the case. There have been several instances in which the mortgage servicing company didn't complete the foreclosure process and the mortgagee's names were still listed on the property as the legal owners.
This has left them in more trouble than they thought because if the property is vandalized or damaged in any way, they may still have to bare the burden of any costs for repairs, tax liens, and other legal actions. In short, you may still be held liable. Any debt or other liabilities associated with the property after you have walked away may find it's way back to you.
Even if you agree with the lender to give the property back by deed in lieu of foreclosure, don't take for granted that the lender is going to look after your best interests. With so many properties going through foreclosure and loan modification processes right now, it's very easy for your paperwork to get lost in the shuffle or put on someone's desk and forgotten.
Talk with your lender on a regular basis until you are sure that your name is no longer on title to the property. Always get copies of everything you sign, including a copy of the deed, and don't leave anything to chance.