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
hi btvs,
if you go for a deed in lieu of foreclosure, the bank will do away with the first mortgage only. the first mortgage holder will sell the house and try and recover the loan amount. if the sale proceeds exceeds the first loan amount (which is rare), the second lender will get the exess amount to recover the second loan amount. but if the sale proceeds are not enough to pay off the second mortgage, the second lender can get a deficiency judgment against you and garnish your wages.
thanks,
jerry
if you go for a deed in lieu of foreclosure, the bank will do away with the first mortgage only. the first mortgage holder will sell the house and try and recover the loan amount. if the sale proceeds exceeds the first loan amount (which is rare), the second lender will get the exess amount to recover the second loan amount. but if the sale proceeds are not enough to pay off the second mortgage, the second lender can get a deficiency judgment against you and garnish your wages.
thanks,
jerry
What if you want to proceed with deed in lieu after a divorce and you have a second mortgage on property.Does this have an effect on her credit if she is cosigned on note?
if you have a $25,000 judgement from a default second mortgage, how much can they garnish?
Hi scrub,
If you and your spouse had signed on the mortgage note and if you default, her credit score will also get affected, besides yours. As far as I know the federal govt. allows only 1/4 i.e. 25% of your wages to be garnished. So , the rest 75% is likely to be protected from garnishment.
If you and your spouse had signed on the mortgage note and if you default, her credit score will also get affected, besides yours. As far as I know the federal govt. allows only 1/4 i.e. 25% of your wages to be garnished. So , the rest 75% is likely to be protected from garnishment.
Mortgage now $100,000 above fair market value of condo. When mortgage was initiated, loan amount was less than 80% of appraised value in 2007. Medical conditions require early retirement and I cannot afford to keep condo. Have not been able to sell. How badly will a DIL affect my now excellent credit rating?
Hi Pradise,
A deed in lieu will reduce your credit score by almost 250 points. I think you should first try and short sale the property as this would drop your credit by 75-100 points, much less damaging in comparison.
A deed in lieu will reduce your credit score by almost 250 points. I think you should first try and short sale the property as this would drop your credit by 75-100 points, much less damaging in comparison.
My husband has been transferred and we brought a home in his new location. My question is, our present home has been devalued almost 50% due to living in Queen Creek, AZ, should we get a deed in lieu? We really cannot affored both homes and we have made all our payments.
Hi sharon,
Falling real estate price is a common phenomenon in the recent times. Many are, thus, opting for a deed in lieu instead of a foreclosure. I think the lender will understand the situation and accept a deed in lieu. However, you need to talk with them in this regard and work out a solution.
Thanks,
Jerry
Falling real estate price is a common phenomenon in the recent times. Many are, thus, opting for a deed in lieu instead of a foreclosure. I think the lender will understand the situation and accept a deed in lieu. However, you need to talk with them in this regard and work out a solution.
Thanks,
Jerry
I need a lung transplant and the city I live in does not have a facility that does one. My husband and I are moving to were one is available. We are not in default on our mortgage. We purchased our home in 2/07. We have tried to sell the home for what we owe on mortgage (we knew real estate fee would be out of pocket) but in three months less than 10 people have even looked at the home. Absolutely no offeres of any sort. Before listing for sale we tried to even rent home for two months, no offers close to our mortgage payments.
We make enough to sqeak out both rent in new city, bills, and mortgage if nothing unexpected happens. We could care less about our good credit at this point. I want to do deed in lieu of but my husband thinks the less the lender knows about us the more likely we will fall through the cracks or fall in with some group that they don't pursue. He says there is no benefit to the mortgage company to agree to do deed in lieu of so we are best to roll the dice.
We have no equity and used a VA so 100% financed. We did do improvements so that should negate most of the drop in market value here in Atlanta.
My question is this... would there be any reason for the lender to agree to do deed in lieu of with this bleeding housing market for someone not in financial trouble?
How do I do voluntary forclosure? Specifically, do I send my keys to where I send my payments with a certified letter stating we are voluntarilly giving the house back? I am pretty sure no matter what we will have to pay things back but I'm trying to mitigate fees added to the loss in mortgage value and such by not making the bank search for us or wait for three month of late payments.
Because this is a VA loan what does voluntary forclosure on it do for the VA part?
Last question, will the bank notify us one the house is sold for how much it sold for?
Thank you,
Heather
We make enough to sqeak out both rent in new city, bills, and mortgage if nothing unexpected happens. We could care less about our good credit at this point. I want to do deed in lieu of but my husband thinks the less the lender knows about us the more likely we will fall through the cracks or fall in with some group that they don't pursue. He says there is no benefit to the mortgage company to agree to do deed in lieu of so we are best to roll the dice.
We have no equity and used a VA so 100% financed. We did do improvements so that should negate most of the drop in market value here in Atlanta.
My question is this... would there be any reason for the lender to agree to do deed in lieu of with this bleeding housing market for someone not in financial trouble?
How do I do voluntary forclosure? Specifically, do I send my keys to where I send my payments with a certified letter stating we are voluntarilly giving the house back? I am pretty sure no matter what we will have to pay things back but I'm trying to mitigate fees added to the loss in mortgage value and such by not making the bank search for us or wait for three month of late payments.
Because this is a VA loan what does voluntary forclosure on it do for the VA part?
Last question, will the bank notify us one the house is sold for how much it sold for?
Thank you,
Heather
Hi
It is true that the lender doesn't agree to approve a deed in lieu if you're current on your mortgage. But they can if you can convince them how difficult the situation you're in is. Thus, I think you should send them a hardship letter which stating the situation you're in and how a deed in lieu would help you.
It is true that the lender doesn't agree to approve a deed in lieu if you're current on your mortgage. But they can if you can convince them how difficult the situation you're in is. Thus, I think you should send them a hardship letter which stating the situation you're in and how a deed in lieu would help you.
i used to have my primary house then i purchase the condo , so it becme investment property, then i sold my condo , and then i moved out of state for the business, i don't have any financial hardship, but what is the best way to get rid of property, i tried to sell at 2,20,000 and keep reducing the price to 1,85,000 . i moved out of state , can't stay in that house so it is still listed as investment property, payine $ 2100/ month for nothing, and can't sell in this market
Your query has been answered in the given link:
http://www.mortgagefit.com/problems/getrid-investmentproperty.html
Please take a look. Hope it helps you.
http://www.mortgagefit.com/problems/getrid-investmentproperty.html
Please take a look. Hope it helps you.
We want to move to a bigger property to accommodate a growing family but we're stuck with our 2 bedroom condo. My husband and I have very good credit score and have not been late with payments. Our 5-year loan will end in 2011 and the market value is currently less than my mortgage loan. If we try to short sale or lieu in deed should we rent a property first before they run a credit check prior to the transaction? How much will tax hit us on this? What fees are associated with a short sale or lieu of deed? Is bankruptcy better than foreclosure? What is the best options for us in this situation?
My husband and I have had nothing but medical issues since we moved into our home 3 years ago. We pay over 50% if our monthy income for our mortgage. We need to move back home so our family can hellp us deal with medical issues. Our home has been on the market since sept.08. no offers. we need to fine a solution and get out from under this home. but at 64 years old we would like to buy another home near our family. How long will it take to get a loan?
Hi!
Welcome to forums!
To FevaDiva,
In order to apply for a short sale or a deed in lieu, there is no need to rent out the property. You can simply contact your lender and apply for it. However, it would be the discretion of the lender whether he would accept your request or not. You can check your credit before applying for the short sale or deed in lieu.
As far as taxes are concerned, you can be charged taxes on the forgiven amount in case of a deed in lieu. However, depending upon your state rules, these taxes can also be removed. I would suggest you to go for either short sale or deed in lieu foreclosure as they will not effect your credit as badly as foreclosure or bankruptcy .
To coastal,
As you are 64 years old, you will be able to apply for reverse mortgage. Reverse mortgages are available these days to buy principle residence as well. However, it would be better if you could sell off your existing property before applying for reverse mortgage. You can apply for a short sale and check out if your lender accepts your request or not.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
To FevaDiva,
In order to apply for a short sale or a deed in lieu, there is no need to rent out the property. You can simply contact your lender and apply for it. However, it would be the discretion of the lender whether he would accept your request or not. You can check your credit before applying for the short sale or deed in lieu.
As far as taxes are concerned, you can be charged taxes on the forgiven amount in case of a deed in lieu. However, depending upon your state rules, these taxes can also be removed. I would suggest you to go for either short sale or deed in lieu foreclosure as they will not effect your credit as badly as foreclosure or bankruptcy .
To coastal,
As you are 64 years old, you will be able to apply for reverse mortgage. Reverse mortgages are available these days to buy principle residence as well. However, it would be better if you could sell off your existing property before applying for reverse mortgage. You can apply for a short sale and check out if your lender accepts your request or not.
Feel free to ask if you have further queries.
Sussane