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How to Get Rid of a House Without Bankruptcy or Foreclosure

by Cari Oleskewicz

If you want to get rid of your house but the market is making it impossible for you to sell it, you might be facing some unpleasant financial options. This is especially true if you are already behind on mortgage payments, or you owe more than the house is worth. Some people resign themselves to foreclosure or file for bankruptcy, but you have other ways to free yourself from the burden of home ownership.

Short Sale

Get permission from your lender to sell the house in a short sale. In a short sale, the price of the home is less than what you owe your lender, so many banks will hesitate to allow it. However, if you demonstrate that you cannot continue paying the mortgage, your mortgage company might agree.

List your home with a real estate agent experienced in short sales. An agent with this expertise will know how to market the home and attract potential buyers.

Talk to an attorney or a tax consultant. A short sale might not discharge all of the debt you owe on the home, and there could be income tax considerations. Any additional financial obligations will depend on the state in which you live.

Deed in Lieu of Foreclosure

Offer to transfer your property directly to your lender to avoid foreclosure. This is called a deed in lieu of foreclosure, and you must demonstrate you are unable to continue making mortgage payments in order for your lender to accept this as an alternative to foreclosure.

Determine your eligibility. Most lenders will require you to have a financial hardship such as a job loss, divorce or a health emergency. You will also need to show you are ineligible for any mortgage modification that would help you afford your house. Finally, most banks will require you to try selling the house. For example, Bank of America requires your house to be on the market without a sale for at least 90 to 120 days.

Prepare to vacate the house as soon as your lender approves your deed in lieu of foreclosure. Depending on the state you live in, you may need to be moved out within two weeks of the bank's approval.

Tips

  • Apply for loan modification and refinance options if you wish to keep your house but need more affordable payments.
  • Short sales and deeds in lieu of foreclosure options will only address what you owe on your house. Any home equity loans or second mortgages will require separate actions.

Warning

  • Rebuild your credit as soon as possible after you get rid of your house. It will be many years before you are able to buy a home again.

About the Author

Cari Oleskewicz is a writer and blogger who has contributed to online and print publications including "The Washington Post," "Italian Cooking and Living," "Sasee Magazine" and Pork and Gin. She is based in Tampa, Florida and holds a Bachelor of Arts in communications and journalism from Marist College.