Can I do a deed in lieu of foreclosure if I have tenants? (real estate, financial)

[Holdencaulfield]

I've tried modification with the lender but they have refused. I'm currently attempting to short sale, but I doubt that I will find a buyer, my property is too much underwater. I am open to deed in lieu of foreclosure, but I heard that some lenders want the property vacated immediatly upon execution of the transaction. I have a tenant who is on a lease, how will this play out?

[ColfaxTeri]

If you have not yet spoken to a real estate attorney and tax/financial advisor you should do so. The "rules" and affects are differnent for non owner occupied properties vs owner occupied, plus your tenants have rights too. Visit www.hud.gov for starters, but each city or county can have additional protections for tenants (which is another reason to talk to the attorney).
As far as your short sale to attract a buyer you need to be priced at current market value and then buyers will come, but the hurdle is getting your lender to agree.

Good luck

[Grainraiser]

Being underwater on your mortgage is the reason for a shortsale. Your lender knows that the property will only be worth the current market value. If they foreclose it is still only worth the current market value so they gain nothing (foreclosure is more expensive for the lender). When we do short sales we request the occupants be out in 30 days.

[Holdencaulfield]

My real estate broker and listing agent told me that majority of the banks he has worked with prefer a foreclosure to a deed in lieu. He informed me that has had little luck with banks accepting deed in lieu. I was surprised to hear this. It makes much more sense for a bank to accept deed in lieu.

[ColfaxTeri]

I've had a client do a deed in lieu with Countrywide (B of A now) but of course every lender is different, and every situation and since yours is an investment property there is some difference vs owner occupied. Good luck to you

[Beena]

Originally Posted by Holdencaulfield

It makes much more sense for a bank to accept deed in lieu.

No it makes more sense to the bank for you to pay your mortgage or not sign for it.