Posted on: 10th May, 2006 01:22pm
If you're not able to pay your mortgage and you can't sell the home or get a work out plan, a deed in lieu of foreclosure is your third option. This option allows you to transfer the property to your lender in exchange for being released from your mortgage.
Does deed in lieu of foreclosure affect credit score?
When you go for deed in lieu of foreclosure, it affects your credit score. Your score will drop by 250 points or so and will stay on your credit report for 7 years. After 7 years, you can have the deed in lieu removed from your credit report and start to rebuild your credit. At the end of the 7th year, you can request the bureaus to remove it from the report.
How long after deed in lieu can you buy home?
Because a deed in lieu has a negative impact on your credit, lenders won't offer you a mortgage for the first 2-3 years. In the meantime, if you try and rebuild your credit the chances are that you may be approved for a loan after the 2-3 years has expired. After that you can buy a new home.
Related Forum Discussions:
my wife and i along w/another couple bought a 2 family with an agreement that one resident would buy the property in one year, he defaulted and left us with a ton of damage and bills. long story short we ended up doing a deed in lieu on the property. our wives were the primary lendees on the mortgage as a result we are seeing a major hit on her credit score taking it down to a 660 or so. lenders can't use her on a loan if we want to refinance or anything because they say the hit disqualifies her. we did not enter this deal to go into the hole, we worked real hard for many years to keep our credit very very good and this one property seems to have wrecked us, we don't have a ton of money, we work hard and have a small home of our own that we would like to refinance, i am getting no's from lenders. i really need some help and i feel hopeless at this point. i just don't want to see all that my wife and i are working for shot because of one bad deal that we only entered into because one tenant wanted to buy the place and take care of it and then we got stuck with it. it took thousands out of our pockets before the deed in lieu. as i said other than that we have had excellent credit, mine is over 740-750. please offer any advice, it is truly truly appeciated. i feel that we are good hard working people and we just don't want to feel hopeless.thank you so much, matt long
I want to move out of my declining neighborhood but can't sell my house. I tried the short sale route but no one offered. My mortgage company is offering a deed in lieu. I've had no problems making my payments so my credit is good. The house was appraised at $14,000 less than I owe. Don't know what to do!
Hi tweety,
You can go for the option of deed in lieu of foreclosure which will help you in getting rid of the property and you won't be liable for paying any deficient balance to the lender. However, this will have a negative affect on your credit report. It will lower your scores by 250 points. It will remain in you credit report for the next 7 years.
Thanks
You can go for the option of deed in lieu of foreclosure which will help you in getting rid of the property and you won't be liable for paying any deficient balance to the lender. However, this will have a negative affect on your credit report. It will lower your scores by 250 points. It will remain in you credit report for the next 7 years.
Thanks
I am trying to short sell my home right now. If it doesn't sell and I try to get a Deed in Lieu, will my credit score decrease by 250 even if I haven't missed any payments on my credit cards and any other bills? My score was about 750 three months ago. Will I have a problem renting a place?
Welcome shortcake,
After a deed in lieu of foreclosure, your credit will decrease by 250 points though you haven't missed the payments. Immediately after a deed in lieu of foreclosure, you may face issues in renting a place.
After a deed in lieu of foreclosure, your credit will decrease by 250 points though you haven't missed the payments. Immediately after a deed in lieu of foreclosure, you may face issues in renting a place.
We owner financed a property. The borrowers have done a deed in lieu of foreclosure. How to we insure that it is reported to all the credit bureaus?
Hi lorabea,
It is responsibility of the lender to report the deed in lieu of foreclosure to the credit bureaus.
It is responsibility of the lender to report the deed in lieu of foreclosure to the credit bureaus.
I am trying to walk away from my house free and clear. I want to transfer the deed to someone who can sell the house themselves. Who can I transfer the deed to so that they by it outright and then sell or rent it out themselves? :D
Hi enzopac!
Welcome to forums!
If your property is free and clear, then you can list it in the market and try to sell it off. However, if you have a mortgage on the property, then walking away from the property will lead to foreclosure and you will be liable for paying off the deficient balance resulting from the sale of the property.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If your property is free and clear, then you can list it in the market and try to sell it off. However, if you have a mortgage on the property, then walking away from the property will lead to foreclosure and you will be liable for paying off the deficient balance resulting from the sale of the property.
Feel free to ask if you've further queries.
Sussane
I co-signed on a fleetwood mobile home with my mother 10 years ago. We were approved for a short-sale because I''m relocating for work and because my marital status changed. We have an offer on the house but when they came out to do an expection, there is about $2000 in repairs that needs to be done before the sale is final. The repairs are things that weren''t required when we purchased the home in 2001, but we were told that the law changed in 2003. We have already paid out about $1000 on cosmetic repairs that the relator requested and just don''t have the funds for the additional repairs. We still have 2 1/2 months left to try to complete a short sale. We are with Wells Fargo. What do they do if you have a buyer but as sellers we can''t comply to complete the sale. Do you know if they will allow us to go ahead and do a deed in lieu at this point or will we just have to proceed with a forclosure?
Hi Blossum,
You can contact your lender and apply for a deed in lieu of foreclosure. It will depend upon the lender whether or not he will consider your request for a deed in lieu of foreclosure as you're unable to complete the needed home improvements for the property. In case he doesn't allow a deed in lieu, then you will have to go for a foreclosure.
Thanks
You can contact your lender and apply for a deed in lieu of foreclosure. It will depend upon the lender whether or not he will consider your request for a deed in lieu of foreclosure as you're unable to complete the needed home improvements for the property. In case he doesn't allow a deed in lieu, then you will have to go for a foreclosure.
Thanks
I recently financed a 2-year used vehicle and the deed in lieu, naturally, had affected my credit and the interest rate for the car loan.
The car dealer showed me the credit report and it simply had the word FORECLOSURE. Is it supposed to say that or should it say Deed in Lieu of Foreclosure or something less ominous than "Foreclosure"?
Thanks for your help.
The car dealer showed me the credit report and it simply had the word FORECLOSURE. Is it supposed to say that or should it say Deed in Lieu of Foreclosure or something less ominous than "Foreclosure"?
Thanks for your help.
My husband has been promoted within his company, and is being relocated many states away. We have no intention of returning to this house and have no wish to keep it. However, the housing market being what it is today, we would be unable to sell the house close to what we owe on it. We have always been current on our mortgage payments, and want to find a way out of this house if we can. We wish to protect our very good credit rating, and retain the ability to purchase a home in our new location within the year. Is it possible that a mortgage holder may accept deed-in-lieu on the current value of the house, and we pay the difference? We are not as bad off as many ppl in our loan-to-value ratio, being at 102.2% Any advice?
If I keep my mortgage payments current till the deed in lieu process is done, will it still have an effect on my credit?
Hi Guest!
Welcome to forums!
If you go for a deed in lieu of foreclosure, then it will have a negative affect on your credit report and it will lower your credit score by 250 points.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you go for a deed in lieu of foreclosure, then it will have a negative affect on your credit report and it will lower your credit score by 250 points.
Feel free to ask if you've further queries.
Sussane