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Module 5
Life as a Homeowner
Your Obligations as an Owner
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Relinquishing Ownership

Facing Difficult Situations
Sometimes financial hardships — such as might be caused by the death of the primary wage earner — may make it impossible to maintain a home. In these cases, the only appropriate course of action is giving up ownership, while avoiding foreclosure. The following options are available if you cannot afford or do not want to keep your home:

  • Assumption of the loan — a method of transferring a house to a new buyer who agrees to take responsibility for (assume) the existing home loan. Not all loans are assumable, so this option must first be discussed with the loan servicer.

  • Sale of the Property — if you are willing to sell your home in order to avoid foreclosure, it is possible that the sale of your property can be approved even if your home is worth less than what is owed on it. This is called a short sale and has important tax implications. Get advice from a financial or tax advisor before you sell your property. The IRS often gets involved with short sales, because they are seen as a relief of debt and may be treated as income. Also, be wary of unscrupulous buyers who may contact you offering to buy your home for far less than it's worth.

  • Deed-in-lieu of foreclosure — this takes place when a borrower voluntarily gives the deed to the property to the lender. A deed-in-lieu of foreclosure has the same impact on your credit record as a regular foreclosure.

Helpful Links

Sites with More Information
To learn more about meeting your obligations as a homeowner and keeping your home, visit the following sites:

Homeownership Preservation Foundation
HUD’s Owning a Home
National Foundation for Credit Counseling
NeighborWorks® Center for Foreclosure Solutions
Steps to help prevent foreclosure from the National Consumer Law Center

These helpful links are also available in the Resources area.

Next Step
To learn how to preserve your home ownership, continue to Foreclosure Prevention.

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