[WSBARP] foreclosure vs deed in lieu

[Rick Hoss]

Lenders make foreclosure decisions for many reasons.  Each bank carefully monitors and categorizes non-performing loans, defaulted loans, loans in foreclosure and other real estate owned.  The number of loans in each of these 4 category is measured every month. Sometimes decisions are made based on timing, and you can get a different answer before or after the next regulatory exam or accounting period.

What if the bank holds too much foreclosed property  (they call other real estate owned) and they have an exam or audit next month?  Sometimes banks prefer a trustee sale or sheriff sale if they think a cash buyer is likely. What if the bank needs to realize, or defer, the loss for accounting purposes? What if the decision maker like a bank branch manager gets a bonus if the branch other real estate owned drops to a certain level? Sometimes servicers spend their foreclosure budget before year end. Some banks don't realize they can take a non-merger deed in lieu and reserve the right to foreclose any later discovered liens not disclosed in the trustee sale or litigation guaranty title reports. Sometimes banks listen to lawyers who have limited experience.

If a lender does take a deed in lieu they require a written agreement - you may get a different answer by proposing a lender friendly agreement with the PR listing the facts in a signed Declaration. From an old bank director and lawyer.

 

 

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Robert R. Cole
Sent: Tuesday, September 22, 2020 5:31 PM
To: WSBA Probate & Trust Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] foreclosure vs deed in lieu

 

Can someone tell me why Lenders don't take a deed in lieu, especially after Borrower's death, even when there is no other loan, and a PR willing to give it, and no Medicaid to be reimbursed?  It has happened to me numerous times.  Is it due to insurance issues or other back office matters???  What are they afraid of?

-- 



 

Very Truly Yours,

Robert R. Cole

Law Office of Cole & Gilday, P.C. 

 

10101 - 270th St. NW 

Stanwood, WA 98292 

(360) 629-2900 (Telephone) 

(360) 629-0220 (Fax) 

 

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