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 Guest,
After a foreclosure, if there is a deficient amount resulting from the sale of the property, then you i.e. the borrower would be responsible in paying it off. The lender will sue the borrower for the deficient amount. If the borrower is unable to pay of that amount, then the lender can charge it off to a collection agency.
After a foreclosure, if there is a deficient amount resulting from the sale of the property, then you i.e. the borrower would be responsible in paying it off. The lender will sue the borrower for the deficient amount. If the borrower is unable to pay of that amount, then the lender can charge it off to a collection agency.
i am two month behind on mortgage dont get enough income to mantain i am always falling behind what should i do
Welcome body,
You should immediately contact your lender and apply for a loan modification. You will be able to save your property if your lender accepts this option and modifies your mortgage.
Feel free to ask if you've further queries.
Sussane
You should immediately contact your lender and apply for a loan modification. You will be able to save your property if your lender accepts this option and modifies your mortgage.
Feel free to ask if you've further queries.
Sussane
I called B of A to get info on doing a short sale that would lead to a deed in lieu. I was put on hold ten times, disconnected three times, and spoke with countless "customer service" agents IN THE SHORT SALE DEPT who knew very little about this process. Do I have to do a short sale to get the deed in lieu? Or, can you just get a deed in lieu without the short sale. And, is there a difference in the impact on my credit if I do one or the other? Also, where would you suggest I go to get the answers to my questions since B of A has its head up its huge ass?
Hi Guest,
I've given my suggestions in regards to your query at:
http://www.mortgagefit.com/predeal/about38929.html#165890
Take a look at it. Hope it helps you.
Thanks
I've given my suggestions in regards to your query at:
http://www.mortgagefit.com/predeal/about38929.html#165890
Take a look at it. Hope it helps you.
Thanks
My husband and I bought a house 5 years ago that was a major fixer upper. . We worked on it for a year and then had a fire in it. The insurance company denied us coverage because we didn't live there. We have been in a lawsuit for 3 1/2 years and just lost the case. We have been paying a morgage and taxes for 4 years since the fire. The house was a complete loss and there is only vacant land there. we were hoping for a recovery to rebuild but that isn't going to happen. We put the property up for sale need to get out of this morgage and start over. If it doesn't sell what do we do please help. Deed in lieu or 203k to rebuild. We have never missed a payment or have been late and are really in desperation. We can afford the payements but have no money to rebuild.
Hi jonajcomo!
Welcome to forums!
If you want to get rid of the property, then a deed in lieu of foreclosure will be a good option for you. It will not only help you in getting rid of the property but you won't be liable for the deficient balance even. However, your credit score would go down by 250 points.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you want to get rid of the property, then a deed in lieu of foreclosure will be a good option for you. It will not only help you in getting rid of the property but you won't be liable for the deficient balance even. However, your credit score would go down by 250 points.
Feel free to ask if you've further queries.
Sussane
my fiance and i purchased a home on may 31, 2007. we paid 155k for the dwelling. our interest rate is 6.875, which at the time was a good rate. however, much like everyone else, our property is in negative equity. to the tune of at least 35k or more. we're in the process of deed in lieu of foreclosure because my fiance has had a diffecult time with working the past two years, and last year ended up in a behavioral health clinic. when she was released she applied for and was granted unemployment. bottom line i dont make enough to float our loan, regardless of a loan modification. but im worried that our mortgage company will be reluctant to grant us deed in lieu. essentially the only other option would be to just mail them the keys and walk away. 3 months ago my fiance stopped recieving checks from unemployment, and has medical situations that are disabling her from working. mentally that is. so now were trying to operate on my income of netting just under four hundred dollars a week. whats the best thing to do in the state of new jersey in this situation?
Welcome baileygoat,
You should contact your lender and apply for a deed in lieu of foreclosure. If your fiancée and you have defaulted on your mortgage payments, then there are chances that the lender will be ready to accept your request. This will help you in getting rid of the property and you will not be responsible for the deficient balance resulting from the sale of the property.
You should contact your lender and apply for a deed in lieu of foreclosure. If your fiancée and you have defaulted on your mortgage payments, then there are chances that the lender will be ready to accept your request. This will help you in getting rid of the property and you will not be responsible for the deficient balance resulting from the sale of the property.
My husband recently joined the military and will be relocated in Jan of 2011. I plan on moving myself and my children to wherever he is at that time. My problem is that I have a home that is only worth about 55,000 and I owe 80,000 on it. I need to get rid of it and know there is no possible way to sell it for the amount we need. Someone brought up deed in lieu to me and I am now considering it. I was wondering, if I decided to do this and the mortagage company sells it for a lot less than what I owe, will they try to collect the balance from me? I cannot afford to pay anything for it and I'm really getting desperate for a way to be relieved from this mortgage. Help!
Hi Guest!
Welcome to forums!
In case of a deed in lieu of foreclosure, your lender will forgive the deficient balance resulting from the sale of the property. He won't come after you for the balance amount.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
In case of a deed in lieu of foreclosure, your lender will forgive the deficient balance resulting from the sale of the property. He won't come after you for the balance amount.
Feel free to ask if you've further queries.
Sussane
which one is worse for credit ? in lieu or short sell ? also , can i make a deal with bank when doing an in lieu for credit reports , like can i ask them not to report in order for me to accept in lieu ??
Welcome sam,
As far as I know, a deed in lieu of foreclosure has a severe negative affect on your credit score compared to a short sale. Deed in lieu of foreclosure will lower your score by 200-250 points whereas in short sale, the score would go down by 80-100 points. You can negotiate with the lender to not report the negative item to the credit report. However, there are chances that he may not accept your request.
As far as I know, a deed in lieu of foreclosure has a severe negative affect on your credit score compared to a short sale. Deed in lieu of foreclosure will lower your score by 200-250 points whereas in short sale, the score would go down by 80-100 points. You can negotiate with the lender to not report the negative item to the credit report. However, there are chances that he may not accept your request.
We own a house in a different state than where we live now. We moved for my husbands job and are now renting a house in our current location. The house we own has been on the market for 6 months and there has not been a serious offer. We have talk to the bank about doing a short sale and they said that we may qualify for a hardship and we could be free and clear of our mortgage. Is this a good option at this point? How will it affect our credit score? Also, we have been current on all our payments up to this point, if we are headed toward a short sale should we stop paying on our mortgage? Will this make the bank more likely or less likely to work with us?
Hi anonymous!
Welcome to forums!
A short sale is a good option to get rid of your property. It will lower your score by 80-100 points. In most cases, the borrower is asked to pay the deficient balance resulting from the sale of the property. However, if you can convince the lender and prove your hardship, the lender may forgive the deficient balance. If the lender asks you, then you may stop paying the mortgage dues.
Feel free to ask if youe further queries.
Sussane
Welcome to forums!
A short sale is a good option to get rid of your property. It will lower your score by 80-100 points. In most cases, the borrower is asked to pay the deficient balance resulting from the sale of the property. However, if you can convince the lender and prove your hardship, the lender may forgive the deficient balance. If the lender asks you, then you may stop paying the mortgage dues.
Feel free to ask if youe further queries.
Sussane