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
As an invester I entered into a trust deed sale & leaseback agreement whereby I purchased 2 condos putting $50k down on each. I used 1031 exchange money. The company I entered into the agreement with is suspending making payments which leaves me with 2 payments of $1000 each which I cannot make to the lender. The properties originally purchased for $188 k each are now worth about $125-$140 K . Any thoughts as to what I should do ??
Hi jmianecki
You have mentioned that the company suspending payments have entered into an agreement with you. First and foremost if they are breaking the agreement, you can sue them.
As you are unable to make the payments, you should immediately contact the lender and check if he can offer you any help. In case you keep on defaulting on the payments, the lender will have the right to foreclose the property.
Thanks.
You have mentioned that the company suspending payments have entered into an agreement with you. First and foremost if they are breaking the agreement, you can sue them.
As you are unable to make the payments, you should immediately contact the lender and check if he can offer you any help. In case you keep on defaulting on the payments, the lender will have the right to foreclose the property.
Thanks.
What if you were never late on the property, but the bank agreed to the deed in lieu. Does it still affect your credit score?
Thanks Dave
Thanks Dave
How long will it remain on the credit report-----
Hi!
Welcome to forums!
To Dave,
Yes, though you were never late on the payments but still the bank has accepted a deed in lieu, you credit score will still be affected.
To Lloyd,
As far as I know, a deed in lieu foreclosure will remain on your credit report for 4 years.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
To Dave,
Yes, though you were never late on the payments but still the bank has accepted a deed in lieu, you credit score will still be affected.
To Lloyd,
As far as I know, a deed in lieu foreclosure will remain on your credit report for 4 years.
Feel free to ask if you have further queries.
Sussane
we are using a company to assist us with this process and so far they have proven trustworthy and helpful. i will update as we go through this, it should be about 6 months..
just google, walkawayplan
just google, walkawayplan
After a foreclosure how long can you wait to buy another house?
Hi rose,
A foreclosure remains on your credit report for at least 5 years from completion date. Within these 5 years, lenders will not be ready to give you loan. Additionally between 5 and 7 years, you can only purchase a personal residence but will have to pay at least 10% down. After 7 years you will get normal rates and terms.
A foreclosure remains on your credit report for at least 5 years from completion date. Within these 5 years, lenders will not be ready to give you loan. Additionally between 5 and 7 years, you can only purchase a personal residence but will have to pay at least 10% down. After 7 years you will get normal rates and terms.
my husband and i are in the construction business and as we know thats not doing so great. we decided to put the house on the market. my realtor thinks we should list it for $224,000 but there is a house 2 doors down that sold for $203,000 4 months ago and also another house with the same floorplan that is listed for $209,000, we have no equity into the house since we got intrest only loan @ 8.7%. we purchased this house 2 yrs. ago for @213,000 we owe the same amount now! we can't refinance since my husband and i are selfemployed and show little income. my question is should i put it on the marketfor that amount ($224,000) or maybe try to do a short sale or ask for a deed of lieu or just walk away. if we do foreclose what are some of the consequences besides credit problems. can the lender come after us and garnish or wages? does the irs get involved? how we that affect our small business?
my deed in lieu was reported to experian 3 months ago and it is showing up on my credit report. the mortage went about 60 dys past due before the deed in lieu was recorded. This mortgage has two loans, one showed up as 'charge off' and the other showed up as 'deed in lieu'. yet, my experian score only dropped 40 points when all the info i got on these net forums tells me it will be 100-250points. should i expect my score to drop lower in the coming weeks and months? when can i be certain that the deed in lieu has fully impacted my score?
Hi,
To ac,
You can list the property at $224,000 and try selling it. If you do not get buyers, then you can lower the rates and re-list the property. If the property sells off at a lower rate, then you will be liable to pay off the deficient amount to the lender.
In case of a deed in lieu, the lender will sell off the property and the deficient amount resulting from the sale of the property will be forgiven. However, a deed in lieu will lower your credit by 250 points and you will also have to pay taxes on the deficient amount. As far as foreclosure is concerned, it will ruin your credit and if you are unable to pay the deficient amount resulting from the sale of the property, then the lender may garnish your wages.
Hi anonymous,
It is surprising to me that your score has dropped by only 40 points. But as one of your loans has been charged off, I think your credit will drop further in the coming days.
Thanks
To ac,
You can list the property at $224,000 and try selling it. If you do not get buyers, then you can lower the rates and re-list the property. If the property sells off at a lower rate, then you will be liable to pay off the deficient amount to the lender.
In case of a deed in lieu, the lender will sell off the property and the deficient amount resulting from the sale of the property will be forgiven. However, a deed in lieu will lower your credit by 250 points and you will also have to pay taxes on the deficient amount. As far as foreclosure is concerned, it will ruin your credit and if you are unable to pay the deficient amount resulting from the sale of the property, then the lender may garnish your wages.
Hi anonymous,
It is surprising to me that your score has dropped by only 40 points. But as one of your loans has been charged off, I think your credit will drop further in the coming days.
Thanks
You can try to refi just in your name.
We have a mortgage on the home we live in but have not been able to sell the home we moved out of for the past two years. Our savings is gone and we need to get rid of the house asap. Will our credit rating get better faster because we already have another mortgage or should we try harder to short sale before deed in lieu?
Hi JZ,
You should contact the lender and try for a short sale or a deed in lieu. But remember that both short sale and deed in lieu will affect your credit score and lower it. As far as another mortgage is concerned, I don't think it will help much in improving your credit score.
Thanks
You should contact the lender and try for a short sale or a deed in lieu. But remember that both short sale and deed in lieu will affect your credit score and lower it. As far as another mortgage is concerned, I don't think it will help much in improving your credit score.
Thanks
i have a 90% mortgage on my property and a 10% home equity line of credit, neither of which i have paid down on very much, it appears i may be moving to a new city soon and may have to do a deed in lieu of foreclosure. will the bank do away with the home equity line of credit also or just the 1st mortgage?