Posted on Friday, April 1, 2011
Conditional DIL Agreement
[Name of Servicer] (“Servicer”)
[Name of Borrower(s)] (“Borrower”)
[Property Address] (“Property”)
[Loan #] (“Loan”)
FLORIDA PRE-FORECLOSURE MEDIATION
[Servicer Name] (“Servicer,” “us,” or “we”) and Borrower (“you”) agree as follows:
1. Execution of Deed-In-Lieu (DIL). Within 30 days (“Requirement Period”) after the date of this Deed-in-Lieu Agreement (“Agreement”), Servicer will confirm the following conditional requirements have been satisfied to approve the Borrower as eligible for a DIL workout option on the Loan. Upon satisfaction of the conditional requirements for a DIL, the Borrower will sign a Deed in Lieu of Foreclosure (“DIL”) provided by Servicer, transferring title to the Property to the owner of the Loan (the “Lender”), along with such other documents as may be required by Servicer, including those typically signed in connection with a DIL in the area where the Property is located. Even after you have signed the DIL, it will not be effective until it is accepted by the Lender.
2. Conditional Requirements:
a. Title. Clear and marketable title to the Property must be transferred to the servicer with no existing subordinate liens outstanding. We will contribute up to six percent (6%) of the unpaid principal balance of each subordinate lien on the Property in order of priority, but in no event will the total contribution by servicer exceed an aggregate of $6,000, toward paying off any subordinate lien holders. Each subordinate lien holder must release you from personal liability for the loans secured by their liens on the Property in order for you to qualify for the DIL, but we do not take any responsibility for ensuring that the lien holders do not seek to enforce personal liability against you. Therefore, we recommend that you take steps to satisfy yourself that the subordinate lien holders release you from personal liability.
b. Mortgage Insurance. If there is mortgage insurance (MI) coverage on the Loan, Servicer will confirm with the MI company within the Requirement Period that the MI company approves the DIL transaction. Servicer cannot accept a DIL on your loan without MI approval if applicable.
c. Title Insurance. Servicer obtains a title insurance policy at a level commensurate with the estimated sales price of the property as determined by the interior BPO (or appraisal) of the property at the sole cost and expense of the borrower.
3. Borrower Acknowledgement. The borrower(s) recognizes and acknowledges that they are in default of their Loan and that this DIL Agreement resulted from a mediation that was conducted substantially in accordance with the applicable Florida circuit court order regarding residential foreclosure mediation. Borrower(s) hereby waive any additional or further mediation in connection with the existing default under the Loan or in connection with any default that may occur under this DIL Agreement.
4. Property Condition and Vacancy. Unless you have been approved for and signed a lease with respect to the Property, you and all other occupants must vacate the Property by no later than sixty (60) days after the date of this Agreement. You must leave the house in broom-clean condition, free of interior and exterior trash, debris or damage, and all personal belongings must be removed from the Property. The yard must be clean and neat and you must deliver all the keys and controls (e.g., garage door openers) to us.
5. Property Maintenance and Expenses. Until the DIL is accepted by the Lender, you are responsible for all property maintenance and expenses for your Property, including utilities, assessments, association dues, and costs for interior and exterior maintenance. Additionally, you must report any and all property damage to us and file a hazard insurance claim for covered damage.
6. Borrower Relocation Assistance. If you comply with all your responsibilities under the Agreement and the DIL Preliminary Requirements are satisfied within the Requirement Period, you will be entitled to an incentive payment of $3,000 to assist with relocation expenses. If there is a formal closing and you have vacated your Property, you will receive your incentive payment at closing. If at the time of closing you have not vacated your Property, we will mail you a check within five (5) business days from when you vacate your Property and deliver the keys to us. Similarly, if a formal closing is not conducted, we will mail you a check within five (5) business days from the later of when you execute the deed to us or when you vacate the Property and deliver the keys to us. Only one payment for the Property is provided for the relocation assistance, regardless of the number of Borrowers.
7. Foreclosure Commencement. We may initiate or continue the foreclosure process as permitted by the Loan documents and applicable law upon the expiration of the Requirement Period and if the Preliminary Requirements are not satisfied.
8. Termination of this Agreement. We may terminate this Agreement at any time if:
a. Your financial situation improves significantly, you qualify for a loan modification, you bring the Loan current or you pay off the Loan in full.
b. All of the Preliminary Requirements are not satisfied within the 30 day Requirement Period.
c. You fail to act in good faith in connection with the Agreement.
d. A significant change occurs to the Property condition or value.
e. There is evidence of fraud or misrepresentation.
f. You file for bankruptcy and the Bankruptcy Court declines to approve the Agreement.
g. Litigation is initiated or threatened that could affect title to the Property or interfere with a valid transfer of clear and marketable title to the Property.
h. [Insert only if applicable:] You do not make the payments required under this Agreement.
9. Settlement of a Debt. The proposed transaction represents an attempt to reach a settlement of the Loan. You are choosing to enter into this Agreement even though the Agreement is conditional upon the satisfaction of the Preliminary Requirements and even though there is no guarantee that the transaction will be successful. In the event this transaction is unsuccessful, we may exercise our remedies under the Loan documents, including foreclosure.
10. Possible Income Tax Considerations. The difference between the remaining amount of principal you owe and the current market value of the Property must be reported to the Internal Revenue Service (IRS) on Form 1099-C as debt forgiveness. In some cases, debt forgiveness could be taxed as income. The amount you receive under this Agreement for relocation expenses may also be reported as income. You should contact the IRS or your tax preparer to determine if you may have any tax liability related to this transaction.
11. Credit Bureau Reporting. We will follow standard industry practice and report to the major credit reporting agencies that your Loan was settled for less than the full payment. We have no control over, or responsibility for the impact of this report on your credit score. To learn more about the potential impact of a deed-in-lieu of foreclosure on your credit, you may want to go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
12. Consent to Release Information. You authorize us to disclose to the U.S. Department of the Treasury or other government agency, Fannie Mae and/or Freddie Mac any information provided in connection with the Making Home Affordable program.
13. [Insert only if applicable:] Partial Mortgage Payments. You will be required to make partial mortgage payments of $_________ by the first day of each month, beginning on __________, 20___, until Lender accepts the DIL and title to your Property is transferred to Lender. You are legally obligated to make the full amount of your current monthly mortgage payments. However, we will accept the new partial payment until title to the Property has transferred. The partial mortgage payments do not constitute a modification of your Loan.
By signing this Agreement, you are agreeing to a deed-in-lieu of foreclosure conditional upon satisfaction of the satisfaction of the Conditional Requirements. If you have any questions about the deed-in-lieu of foreclosure, please call us before signing and returning this Agreement.
PLEASE READ THIS AGREEMENT CAREFULLY BEFORE YOU SIGN, BECAUSE IT AFFECTS YOUR LEGAL RIGHTS.
Borrower Acknowledgement of Risks, Conditions and Contingencies. In signing and returning this DIL Agreement, I/we agree to all the terms and conditions stated above.
Borrower Signature Date Co- Borrower Signature Date
Printed Name Printed Name
Signature of Servicer Representative Title
Printed Name of Servicer Representative Date