Deed for Lease (D4L)
How does this program help me?
First we need to explain the deed-in-lieu process. When foreclosure is the only option you can try to do a deed-in-lieu. A deed-in-lieu is when you agree to save the lender the hassle of going through the foreclosure process by signing the deed to your house over to them. It is a deed-in-lieu of foreclosure. Remember, a foreclosure is an expensive option for a lender, there are legal fees, more missed payments and sometimes even damage to the house. In exchange for helping the lender get title to the house quickly you would want the lender to agree to not come after you for their losses (and get it in writing).
Further more, with this program after you complete your deed-in-lieu with the lender they will lease your house back to you for up to 12 months. This allows you to make the transition with less impact on yourself and your family.
Who should I contact?
Only your servicer can do this program. Your servicer is the company you mail your monthly mortgage payments to. Get out your monthly mortgage statement and call the customer service number on it. Tell them you want to apply for the Fanne Mae Deed for Lease Program. It is often their "loss mitigation" department that handles these types of programs so they might transfer your call there.
In addition, we highly recommend that you get a consultation with a real estate attorney and/or a bankruptcy attorney about the legal differences between a short sale and a foreclosure. There are significant differences and ramifications between the two and each has different protections from the lender coming after you for their losses at a later date! Click here for a nationwide lawyer referral service or ask friends and family for recommendations. Also, talk to your accountant/tax person about the potential tax consequences.
What should I expect?
It should be noted that the lender is required to calculate the lease at current market rents for your area, there are no special discounts. Also, if that lease payment will be greater than 31% of your gross monthly income you are considered ineligible.