Deed In Lieu of Foreclosure Cover Letter For Bank

The following Sample "Deed in Lieu of Foreclosure Cover Letter" is a basic example of the information you want the lender to know to encourage them to agree with your request. You should make any changes that more accurately reflect your situation or use language you feel more comfortable with. Although we recommend that you meet with a lawyer to fully understand your obligations and the potential consequences of using a deed in lieu of foreclosure, this letter can be used alone or in conjunction with your attorney.

Before contacting the bank with your foreclosure plans, get as much information as possible regarding the value of your home to show the bank that you have an underwater mortgage. Then use this Sample Cover Letter or something similar together with a Financial Hardship Letter and your underwater mortgage information to get the ball rolling and be persistent. Working with the bank is much easier for them than homeowners who simply "walk away" and they need to be reminded of your continuing option to do that or defend the foreclosure lawsuit if they won't agree to the deed in lieu of foreclosure. Read More on "Deed in Lieu of Foreclosure."

Even if the bank agrees to the Deed in Lieu of Foreclosure, make sure they also agree to waive the resulting deficiency balance and agree not to pursue a deficiency judgment against you. Read More About "Deficiency Judgments."

Sample Deed in Lieu of Foreclosure Cover Letter

789 Doe Street

City, State, Zip Code

Re: Property Address: Loan Number:

To Whom It May Concern:

We are the borrowers on the above-referenced loan. As a result of deteriorating economic conditions both personally and nationwide, we've been forced to dramatically alter our plans to avoid financial catastrophe. As a result, we have no option but to convey the property back to you using a Deed in Lieu of Foreclosure and need your approval to move forward.

To support our decision to execute a Deed in Lieu of Foreclosure in your favor, we've attached a "financial hardship" letter summarizing our overall economic condition and how we got here. We've also spoken with several realtors and conducted online research to determine the value of our home. Unfortunately, we've confirmed that our mortgage is significantly underwater and that the amount of the loan is much more than we could ever sell our home for.

In fact our loan is so far underwater that it will likely be years before it regains its prior value. [BRIEFLY EXPLAIN YOUR UNDERWATER MORTGAGE EVIDENCE HERE]

After evaluating all of our foreclosure alternatives, we've concluded that the only way to salvage and protect our financial future is to move on and return our home back to you. This option - including agreement to waive any resulting deficiency balance - allows us to work together and get on with our lives while avoiding the time and expense of a foreclosure lawsuit for the bank with little or nothing to gain.

As you know, time is of the essence so please contact me as soon as possible to confirm your approval or let us know if you need any additional information for the confirmation of our request.

Thanks in advance for your anticipated cooperation.

Sincerely,

[HOMEOWNER]

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