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Many residents in Florida nowadays prefer for Mortgage Release in place of doing a short sale of property or modifying their loan. A Deed In Lieu Of Foreclosure Florida is a deed instrument where a borrower offers all his or her property interest to the owner of mortgage in order to satisfy the default loan, to avoid any foreclosure proceedings. Once the agreement is signed between the lender and borrower, the lender marks the Note securing the mortgage as being assigned to him. The lender now provides the borrower with necessary documentation declaring clearly that the mortgage debt is canceled. This document also waives the lender's right to seek a deficiency balance of any differential amount between the original balance and the amount the lender will receive when the property is finally sold. The agreement is then sent to a reputed Title and Escrow company in Florida for transaction process and record. Once the transaction is recorded and consummated, the agreement is sent back to borrower freeing him from any responsibility of mortgage. Benefits of Mortgage Release: The main benefit with this agreement is that it immediately helps borrower by releasing him or her from the personal indebtedness related with defaulted loan. Besides, it also helps borrower to avoid any protected and long proceeding of going through foreclosure that normally raises the deficiency amount due to attorney's charges paid by the lender to prosecute the foreclosure. A deed in lieu can have some tax consequences that property owners must be aware of. IRS department normally counts debt amount forgiven as income amount and accordingly levy the tax on borrower. However, due to the Mortgage Forgiveness Debt Relief Act, any debt amount forgiven between the financial year 2007 and 2012 may not be considered as income by the IRS with certain conditions. The top most condition is that the property in question should be borrower's main residence. Hence, debt forgiveness amount is not eligible for income tax exemption if the property is a second home or rental. As per IRS's rules the property must be owned and occupied by the borrower himself for minimum of two years or 730 days and any absence of more than a year will be counted as non-occupancy. Over and above, the Act restricts the forgiveness amount to maximum of two million dollars. There are other conditions too which the borrower needs to look into before opting for Mortgage Release. Generally speaking, if a borrower is unable to fulfil his debt obligation of mortgage, the credit rating is adversely affected. However, the borrower can start rebuilding straight away their credit after the deed in lieu is done and executed. Some reputed law centers are there in Florida that provides help to rebuild your credit rating and credit repair. In Florida, a lender is not under obligation to contact or inform the borrower prior to filing a foreclosure suit. Hence, if you foresee any such situation in advance, contact any reputed Florida Foreclosure attorney to review your mortgage and guide you properly and legally to stop foreclosure. Litvin Law: Leading Foreclosure defense attorneys firm offering result driven legal mortgage & foreclosure crisis strategies, like-deed-in-lieu of foreclosure, short sale laws etc. with world-class client service.
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