Bankruptcy Indiana

As an Indianapolis bankruptcy lawyer for close to 25 years, I made the decision just one year ago to offer help with mortgage modifications and to keep readers of my Indiana bankruptcy blog up to date on mortgage issues and programs that help save homes. 

I thought my Indiana clients and blog readers would be interested in the answer to one blog reader's question:  "Which is better," he asks, "a Deed for Lease, or a mortgage modification?"

The first thing I need to explain is that Fannie Mae, the federally-controlled mortgage agency, will not even offer its new Deed for Lease to homeowners unless those homeowners have tried to negotiate with their lenders and been unsuccessful.  Homeowners must also not qualify for the Obama loan modification plan.  It's not a question, therefore, of Deed for Lease being better than modification, or the other way around.

What is true is that, when you sit down with me to discuss financial issues and explore the options available to you, Deed for Lease is now going to come up in the conversation.

The Deed for Lease program is a stimulus measure under which people who are in danger of being evicted from their homes can be allowed to remain in the homes as tenants rather than as homeowners.  The deed to the home is turned over to the lender, while the homeowners-turned-tenants pay a monthly rent based on market rental rates in their area.

The new program is part of the same end-of-2009 stimulus bill that extended unemployment benefits and expanded the one-time home buyer's credit.  Deed for Lease means losing ownership of one's home, to be sure, but it also means the homeowner doesn't need to move.  The program buys time for homeowners to keep looking for work.  It means children can finish out the semester in a familiar school.

I was talking about this with the Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices there, and we agreed that Deed for Lease is just another tool for us to use in our work.  Which is better - Deed For Lease or mortgage modification?  (Is one tool better than another?)

Since each client situation is unique, my answer is - "It depends!"