While a deed-in-lieu of foreclosure might sound like a simple solution to homeowners facing foreclosure, this really provides them with little benefit.

The lender wins hugely. They get the property back quickly and cheaply and do not have to worry about legal fees or fighting a foreclosure defense.

So why is this happening? Despite the size and the length of the foreclosure crisis, there is still a dearth of accurate and useful information to help those facing foreclosure. At least, it is not getting to those who need it.

Homeowners are not sure where to turn. Everybody was hoping to get a principal reduction on their mortgage. Obama’s loan modification program was touted by many as a solution to this crisis. Homeowners are now discovering that they were not able to qualify for the much heralded loan modification schemes and are letting their homes go.

So what is the problem with doing a deed-in-lieu of foreclosure?

The homeowner could still get stuck with a deficiency judgment, unless they qualified under HAFA or got the lender to provide full satisfaction of the total amount due. Despite a lot of belief to the contrary, a deed-in-lieu could hurt your credit as much as a foreclosure. Thus, it could stop you buying again for five or more years.

Homeowners should first consider doing a short sale. A short sale has less impact on your credit, according to most experts, because it shows you were taking action. It also allows you to buy again after two years. Finally, it will be much easier and quicker to rebuild your credit, which could also save you thousands of dollars in car payments.

A word of warning, however – make sure that in the negotiation for a short sale, you get the bank to give you a full payoff so that you do not get stuck with a deficiency judgment or a promissory note. It is also wise to find someone with a successful track record to make sure that all goes according to plan.

In summary, in a short sale, the homeowner can sell the property at a low price in order to get it sold fast. This enables them to get on with their life, fix their credit and be eligible to buy another home in as little as two years. If they buy again, their mortgage will probably be half what it was before.

Real estate owned or REO properties are houses foreclosed by banks because of the failure of their homeowners to pay their mortgage loans. They are properties that were not sold at auctions and returned to the banks. Buying REO properties has many advantages, especially to new investors.However, these foreclosure properties also carry few risks. But the good news is, you can overcome these risks by identifying them and knowing your market.

Why REO properties are Great Buys:

To begin with, bank owned properties are sold at very low prices. Buying them gives you a chance to earn considerable profit because you need only to pay a small amount and expect a huge return for your investment.

If you are new to the real estate foreclosure market, bank owned properties are the best buys because they are safe. This means they do not have any hidden liens or back taxes. Banks will make sure that the foreclosed houses on their inventory are free of any debts before they will place them on the market for sale.

Also, you do not need to worry about evicting previous tenants from bank foreclosed houses. Banks will make sure that previous owners have vacated the premises or the property before it will be put on the market.

Furthermore, banks have already conducted an inspection of the house before they put it on sale. This will mean savings for you because you do not need to hire a home inspector to appraise or evaluate the property.

How to Find the Best Bank Owned Homes:

Many bank owned properties that are sold can be found on foreclosure lists. If you subscribe to one, you will get to see and go over the
properties. Because they were not sold at auctions, banks are eager to sell these REOs, giving you a lot of opportunities to negotiate for lower prices.

Additionally, banks are more willing to offer financing for the foreclosed properties on their inventories. And usually the rates are below the market standard.

To wrap it up, REO properties are the best deals to put your hard earned money. They come with fewer risks and provide you with better bargaining chances.