Can I Transfer A Deed In Lieu Of Foreclosure?
Excerpt from Chapter 3
“Deed-In-Lieu of Foreclosure”
When a timeshare owner is undergoing significant financial distress and has an inability to continue with payments of the mortgage or the annual assessments, eventually they become delinquent and enter into a default state. They could be overdue with the lender and/or the resort Homeowner’s Association. Although sometimes lenders can work out a different payment plan, if it becomes apparent that one cannot maintain the financial obligation, after a series of threatening letters and phone calls, the lender or H.O.A./C.O.A. ends up having to begin foreclosure proceedings. If this is you, there may be the possibility of a more copacetic and proactive course of action.
Before entering into a foreclosure situation, or with the intent to get proceedings halted, you could contact the developer or lender to see if you could pursue a “Deed in Lieu of Foreclosure” arrangement. Which is really another form of deed back, whereas, you agree to give them back the deed and title and, in return, they agree to stop any foreclosure proceedings and absolve you of the financial obligations. This may be the least impactful way out of the timeshare mortgage commitment, with possibly less costs and damage to your credit and less procedure costs to the company. A D.I.L. still depends mostly on consent from the developer, lender, and/or Homeowner’s/Condo Association and will require definite effort on the owner’s part. It is not just a magical waving of the wand to make the mortgage disappear and let you off the hook from your financial commitment.
Realistically, when there’s still an outstanding loan balance, any debt cancellation pertains to who currently owns the mortgage. Of course, if still with the developer, they typically don’t want the property back and would rather the cash payoff of an outstanding mortgage on a timeshare. Still, before being subjected to added collection costs, bankruptcy procedures, and courts fees, they may be willing to consider the return of their inventory and simply cutting their losses. However, the loan is often sold to an outside finance company and is no longer with the original developer financing. In which case, it would be entirely up to the lender to have to unload your inventory in the event of letting you out of your obligation. It could very well be then, that they will proceed with a foreclosure instead. That is, unless there is possibly an arrangement with the developer to buyout intervals. The developer may still be able to sell it for a premium when actively selling. Although, some timeshare organizations will sell “foreclosed” inventory at a deeply discounted price to move it quicker and alleviate unpaid maintenance fees. It’s really up to you, first and foremost, to persist with the lending company to discuss your financial hardship situation, and for hope of any forgiveness of the debt/cancellation of the mortgage.
If there is not an existing loan in place, and the default is with your annual obligation of condo/maintenance fees and membership costs, at least there is no outside loan to hinder the request. With the right persistence and approach it still may be possible to get consideration of giving back the deed versus foreclosure for unpaid annual fees. The decision, then, is usually ultimately made by the H.O.A. /Board of Directors. Don’t accept the first “no” and make sure that you are pleading your case to the proper party. Be diligent in getting the names of the president of the H.O.A. or Chairman of the Board. Once finding the proper information of whom you contact, be sure to address them by formal letter explaining your unique situation and follow-up with phone communication. You will have to work around the regular roadblocks designed to keep you from proceeding with attempting to not have to fulfill your obligation.
In any case, it’s essentially up to you to petition your case of desperation, hardship, insufficiency, major health concerns, injured spouse due to a loss of loved one, or other dire situation that may prove worthy of consideration. You’ll need to definitely be outside of every other timeshare owner who’s just “looking to get out.” It will be challenging, and they may flat out refuse, but it’s worth the try. If successful, of course, it would mean forfeiting any equity that you had, but at least you could be absolved of your timeshare commitment.
Once again, this deed back/financial course of action should be absolutely necessary when considered, to avoid further negative impact in the timeshare industry. Those who have walked away from their timeshare financial commitment(s) have often left the remaining timeshare owners having to compensate for their unpaid maintenance fees and taxes, thereby increasing their own. When a timeshare company is no longer selling their product, there is no way to simply shift the title and financial responsibility over to the next new owner.