Luther Burbank Savings took ownership of this house via a deed-in-lieu-of-foreclosure – without ever filing a notice of default. The previous owner (who paid $568,000 in 2003) never tried to sell either, but had two loans, the LBS first mortgage of $594,500 plus a second loan for $121,000:
Here is Bank of America’s policy on deed-in-lieu-of-foreclosure:
You may be eligible for a deed in lieu of foreclosure if one or more of the following apply:
You are going through a hardship (for example, a job loss, divorce or a medical emergency).
You are unable to afford your current mortgage payment.
You are unable to modify your current mortgage to make it affordable
You tried to sell your property at fair market value with a licensed real estate agent for at least 90–120 days and were unsuccessful
Depending upon your loan type, when you complete a deed in lieu of foreclosure, up to $3,000 may be available for your relocation expenses. You may also be eligible for up to $8,500 to help settle obligations such as your home equity loan or line of credit. A deed in lieu effectively ends your home loan, and in some cases means you are not required to pay any remaining amount owed on your loan (also known as the deficiency).