? about Deed in Lieu of Foreclosure?

Question

General question- how does this work if you have a home equity loan as well as a mortgage?

yes, I have the original mortgage and a home equity loan on the same property.

Ok, they are not through the same company. One is a small home equity loan that I continue to make the payments on, but the original mortage is falling behind due to family circumstances. I am trying to research different ideas to get out of the situation- the house was way over apprasied when I refinanced a couple of years back and also when I obtained the home equity loan and while it may still be "worth" the appraised value, it will never sell for that much in this market.

Answer 1

When you have 2 different mortgages, you probably can not do a Deed in Lieu of Foreclosure, because each mortgage forbids you from transferring title during the terms of the loans, under penalty of mortgage principal acceleration. You are responsible for the payment of both mortgages and the promissory notes associated therewith.

If both mortgages are with the same lender and if foreclosure is imminent, you contact the appropriate department of the lender (probably the legal department), and ask them if they will take your Deed in Lieu of Foreclosure for a FULL release of BOTH mortgages AND cancellation of both promissory notes. That is, in exchange for your Deed for your property to the lender, the lender will decline foreclosure proceedings, and will give you 2 mortgage releases and 2 canceled notes (one for the primary mortgage loan and one for the equity mortgage loan). You should be represented by an attorney if you do this procedure.

Answer 2

You then have 2 mortgages on the same home. Both are on title.