Pre-signed deed in lieu?

[Bryan Hartlen]

Wondering if anyone has executed a loan or extension backed by a pre-signed deed in lieu?

We have a borrower that has requested an extension on his mortgage before his balloon is due. He's current but unable to make the upcoming balloon. We're willing to extend, but want to make sure that we're out of the property within our planned investment horizon and with minimal risk of payments stopping and having to FC.  Borrower has agreed conceptually with the idea of an extension coupled with a pre-signed / notarized DIL that we'd contractually agree to not record unless he defaults. Any reason why this wouldn't work?  Has anyone done something like this before?

[Chris Seveney]

I have asked 3 different attorneys on this as we buy a good amount of notes. Everyone has told me it will never stand up in court.

Also look at it this way, what if the borrower comes back and says you owe them all the monies paid post signature on deed in lieu?

Note: just because it’s in a contract does not make it enforceable it is is not in compliance with the law.