What About Deeding My House Back to the Bank as a Way Out?

“Dear Steve,

what are your thoughts on deeding your home back to the bank?we went thru a modafication and they dropped our rate 3 pts,but added 16 years and 20,000 and we don’t want to sign because our house is already underwater now and they want us to sign a loan for 179,000 when the value is only like 155,000.we are in our mid 50’s and i have not worked since jan.this is a new option from fannie mae.they say we could remortgage in 2years.we have credit card debt from way back when i gave our bills to atlas consumer coop to handle,six months down the road the only ones getting any money was them.by the it was out of control.i tried to get in touch with creditors and was told it was charged off,now i’m paying attorneys who are collecting for capitol one.yesterday i recieved another one from hsbc for 4000.00 owned by capitolone.student loan,that when she can’t pay it we do.so i have spoke with green tree as to us not agreeing with the m odaficatio and they said they would start foreclosure,but our other option is to sign it over,and they will give us 3400.00 for moving expenses!i have not heard a word in 5 weeks.any answer to our problems would be greatly appreciated.

Renee”

Dear Renee,

You can deed the house back, they don’t have to accept it. I doubt they would unless you negotiated a solution with the bank where they agreed to take the house back.

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If they do, then make sure they put in writing they will not pursue you for any balance due and in fact will forgive that amount completely. And then never lose that paper.

I’m kind of at a loss as to why you just don’t consider stopping payments on the house, letting them foreclose and discharge all of your debt with bankruptcy and get the legal fresh start you are entitled to? It’s probably the most logical way for you to start over again and get back on your feet quickly to save again for retirement.

I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Once you’ve identified a company you want to work with, then follow my step-by-step guide on how to check out a debt relief company.

Please post your responses and follow-up messages to me on this in the comments section below.