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
does a "deed in lieu of foreclosure" on a reverse mtg. have any effect on your credit score?
Hi richardm,
A deed in lieu of foreclosure will have negative impact on the credit of the person who has taken out the loan.
Thanks
A deed in lieu of foreclosure will have negative impact on the credit of the person who has taken out the loan.
Thanks
i filed bankruptcy last year along with forclosure of my home. i owned it for 10 years and had a second mortgage for 3. the debt from that is what kept me from being able to keep my home. the bank contacted me with an offer of deed in leiu and 3000 dollars to relocate instead of having the forclosure on my record. my lawyer said that i couldn stay in my home until there was a sale on it so that would give my husband and i enough time to save money and find something else and hopefully be closer to buying a home again. my husband doesnt really have any credit but he wasnt involved in the bankruptcy so i'm hoping that will help us. my question is at this point does it matter if it's forclosure or deed in leiu on my credit report?
hi angel,
a foreclosure will be considered more negative than a deed in lieu of foreclosure. so, if you're getting the option of a deed in lieu of foreclosure, you should go for it.
a foreclosure will be considered more negative than a deed in lieu of foreclosure. so, if you're getting the option of a deed in lieu of foreclosure, you should go for it.
My wife and I are at the end of a bad situation. three years ago my wife had breast cancer and it put us in a little financial bine. We reach out to our mortgage company for help and they placed us on a 6 month modification. After the 6 months our finances had not changed so we tried to reaply for modification and was denied. We called a third party modification company and they said all the right things to us. they advise us not to pay our mortgage company that they would speak on our behalf. We paid them a fee of $2300.00 and doing the process nothing was happening so 8 months passed I needed to call my mortgage company to get things back on track. Now, We are 8 months behind on the mortgage and we know it's going to be hard to pay the back 8 months. We started paying the currents months but can't pay the back months. We decided to place the home up for short sale because it's nothing more we can do.Time is not on our side, our mortgage company just rejected the last payment we made because they want all of the back balanace and we just don't have it. Because of the lack of time should we do the deed in lieu?
hi guest!
welcome to forums!
you can contact the lender and apply for a deed in lieu of foreclosure. if the lender accepts your request, then it will help you in selling off the property and you won't be liable for paying any deficient balance to the lender.
feel free to ask if you've further queries.
sussane
welcome to forums!
you can contact the lender and apply for a deed in lieu of foreclosure. if the lender accepts your request, then it will help you in selling off the property and you won't be liable for paying any deficient balance to the lender.
feel free to ask if you've further queries.
sussane
So, base on what you read regarding my situation. You think the deed in lieu is our best way out?
Hi Doc!
Welcome back to forums!
I personally feel that deed in lieu of foreclosure is the best way to deal with your situation. If your lender agrees to this option, then you can go ahead with it.
Feel free to ask if you've further queries.
Sussane
Welcome back to forums!
I personally feel that deed in lieu of foreclosure is the best way to deal with your situation. If your lender agrees to this option, then you can go ahead with it.
Feel free to ask if you've further queries.
Sussane
After 6 Months trying to short sale my house that I do not currently live in Short Sale Fell Through I can't wait any longer. Had to move for job.I am current on the loan although it has been vacant for 6 months and My family and I are currently leasing a house. My credit score is 820. BOA says I can do the Deed In Lieu. I have an 80/20 Split loan. I live in Houston Tx. Will the Deed In Lieu cover both the loans? Should I stay current on my loan's through out the process since late pays affect your credit too?
Hi Shawn,
If both the loans are with the same lender, then you can sign an agreement with the lender stating that the deed in lieu will include both the loans. There are high chances that in order to get the deed in lieu approved, you may have to be late on your payments. Also, it should be noted here that a deed in lieu will lower your scores by around 250 points.
Thanks
If both the loans are with the same lender, then you can sign an agreement with the lender stating that the deed in lieu will include both the loans. There are high chances that in order to get the deed in lieu approved, you may have to be late on your payments. Also, it should be noted here that a deed in lieu will lower your scores by around 250 points.
Thanks
my husband and i are moving out of state for a job. we are purchasing a new home from the previous owners who are going to finance us for 2 yrs then at that point we are to refinance with a bank and move the loan over. the paperwork is made out such that the bank siad it would be an easy refinance and we wouldn't have to put any more money down in the house in 2 yrs or sooner whenever we get the credit up 20 pts. the problem is are credit needs to come up 20 pts before the bank would finance us and we need to move now. are issue is this we are trying to rent are current house but so far no luck . bo point trying to sell at what we owe in the loan its not worth that much. if we do a short sale or foreclosure or deed in lie would we be able to refinance in 2 yrs with a bank ? we are behind on payment 7 mths and have been given a chance to do a modification but have not accepted yet as we may try and do a short sake etc instead . thanks
hi beka,
after a short sale or a deed in lieu of foreclosure, you need to wait for 2-3 years in order to get a new mortgage or a refinance. if you want to save the property, then loan modification will be a good option for you.
thanks
after a short sale or a deed in lieu of foreclosure, you need to wait for 2-3 years in order to get a new mortgage or a refinance. if you want to save the property, then loan modification will be a good option for you.
thanks
my parents did a reversed mortgage on their home. they are now both deceased. in my parents' will, the house was left to me and my siblings. the reversed mortgage company has given us the option to do a deed in lieu of foreclosure if we don't wish to try and sell the house. we are being told by my attorney not to do the deed in lieu, as it will affect mine and my siblings' credit score, as the house now technically belongs to us. is this correct? how could my parents' choice possibly be transferred to our credit? my parents, siblings and myself have worked very hard to have good credit, and we each have a very good credit score. my siblings and me do not feel it is fair to have this 'black mark' against us. can you tell me if this is correct, that it will affect our credit? i'm not sure state laws are different, but we are in virginia. thank you.
Hi Guest!
Welcome to the forums!
Unless the mortgage is in your name, the deed in lieu of foreclosure won't affect your credit. As far as I can understand, the reverse mortgage is in the name of your parents. So, even if you opt for deed in lieu of foreclosure, it won't affect you.
Feel free to ask if you've further queries.
Sussane
Welcome to the forums!
Unless the mortgage is in your name, the deed in lieu of foreclosure won't affect your credit. As far as I can understand, the reverse mortgage is in the name of your parents. So, even if you opt for deed in lieu of foreclosure, it won't affect you.
Feel free to ask if you've further queries.
Sussane
We started deed in lieu paperwork 4 years ago, and have just gotten the word this week it will be finalized in the next month. Our credit reports for both myself and my husband report a " Foreclosure" and have for two years. Will we have to wait another two years before thinking of purchasing a house, and will this be on our credit for a grand total of 9 years instead of the actual 7 years. We had to repeat paperwork 4 times with the company, who has been notorious for their handling of their mortgages the past few years and I do not think this penalty is fair when we began this process in 2009. Any advise is appreciated!