Deciding to Execute Deed in lieu of Foreclosure

[Kyle Taylor]

I've recently financed a rehab project in Burlington, NC. The acquisition cost of the property was $40K and the projected rehab at project start was $60K. My borrower has received $44k in rehab money and the only items completed so far are the roof, windows, and demo. The project was closed on 03/13/23 and the loan matured on 09/01/23. The borrower has defaulted on their August payment and has asked for an extension to complete the project by December due to higher cost than expected and contractor availability. The ARV is $175K and at this point I don't believe the borrower has performed adequately with the funds already received and I doubt the borrower could reasonably complete the project in the time requested. I admit I made several mistakes in not being more diligent in receiving receipts and detailed plans as the borrower and I have worked together before. Would it be in my best interest to have the borrower sign a deed in lieu of foreclosure and complete the project myself? I plan to extend the project to Spring 2024 which would be less resource intensive on my budget and would allow me to sell the home during a more agreeable home buying season.