Will the Bank Trade My House for One it Owns?

By Mike Broemmel
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Facing growing financial problems, you may worry about your ability to keep your home and avoid foreclosure. There are options available to you when it comes to reining in financial problems and dodging the prospect of foreclosure. One possible option that may be available to you is working out a trade or exchange of your house for a less costly one owned by the bank (or other lender) that holds your home mortgage loan.

House Trade Fundamentals

The strategy of pursuing a house trade with your bank or other home mortgage lender requires a basic understanding of the process. Rather than continue to incur a mounting delinquent balance on your current home mortgage loan, leading you down the road to foreclosure, you propose a house swap. Specifically, you propose to your home mortgage lender that you surrender your current residence and agree to trade for a property in your bank's inventory of lesser value.

Costs of Foreclosure

A trade arrangement is appealing to lenders in some situations because they avoid the costs and time associated with a foreclosure. You benefit by getting out from under a mortgage you reasonably cannot afford and into a home and loan that is within your budget.

A lender actually incurs fairly significant costs in foreclosing on real estate. These include attorney fees and court costs as well as other expenses. Moreover, depending on the specific laws in your state, a foreclosure case can take months to complete.

Threat of Bankruptcy

One strategy to employ in seeking a house trade agreement with your bank is advising a representative of your lender that bankruptcy is on the horizon for you if you cannot find solution to the matter of your home mortgage debt. The prospect of a bankruptcy gets the attention of a mortgage lender. A mortgage lender experiences significant expenses in having to deal with a borrower in bankruptcy. A house swap or trade becomes more attractive to a bank when a potential alternative is bankruptcy on your part.

About the Author

Mike Broemmel began writing in 1982. He is an author/lecturer with two novels on the market internationally, "The Shadow Cast" and "The Miller Moth." Broemmel served on the staff of the White House Office of Media Relations. He holds a Bachelor of Arts in journalism and political science from Benedictine College and a Juris Doctorate from Washburn University. He also attended Brunel University, London.

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