Posted on: 20th May, 2009 06:59 am
Could someone please give me the bullet points on the difference of a Deed in Lie of Foreclosure vs. a Short-Sale?
Thanks for the help.
Thanks for the help.
hi dveeneman,
the main differences between a deed in lieu and a short sale are as follows:
the main differences between a deed in lieu and a short sale are as follows:
- a deed in lieu of foreclosure affects your credit almost as much as a foreclosure. it drops your credit by almost 250 points. but a short sale affects your credit by 70-100 points.
- in a deed in lieu of foreclosure if there is any deficient amount arising out of the sale of the house, it is generally forgiven. in a short sale, the borrower often has to pay the difference. there are exeptions as well.
- as a dil has a greater effect on your credit it is not easy to get a loan after the dil. on the other hand, it is comparatively easy to get qualified for a loan after a short sale, provided you have not missed any payments prior to the sale. after a foreclosure you will have to wait for at least 3-4 years, whereas you can get a loan after 2 yrs of a short sale.
Jenkin7,
Thank you very much for your reply. That is very helpful. It sounds like it is a gamble regarding whether or not the lender pays the deficient amount in either case. I would hope my lender forgives me on a short sale considering I have never missed or ever been late on a payment in over three years (since I have owned my house). I will possibly be taking a job out of state within the next couple weeks and will not be able to afford my home mortgage and a rental in a different state. I have had my house up for sale with a realtor agen ever since I was laid-off from my job about 5 months ago. I hope this would be enough reason for the lender to forgive me...otherwise I guess I would just have to opt for the DIL...I am not sure if my lender would be honest and up front with me and offer to forgive me the deficiencey in a short-sale or if I should just go for DIL right away considering it sounds like there is a better chance they will pay the difieciecey with a DIL...If you have any furhter advice, feel free to let me know:) Thank you very much.
Thank you very much for your reply. That is very helpful. It sounds like it is a gamble regarding whether or not the lender pays the deficient amount in either case. I would hope my lender forgives me on a short sale considering I have never missed or ever been late on a payment in over three years (since I have owned my house). I will possibly be taking a job out of state within the next couple weeks and will not be able to afford my home mortgage and a rental in a different state. I have had my house up for sale with a realtor agen ever since I was laid-off from my job about 5 months ago. I hope this would be enough reason for the lender to forgive me...otherwise I guess I would just have to opt for the DIL...I am not sure if my lender would be honest and up front with me and offer to forgive me the deficiencey in a short-sale or if I should just go for DIL right away considering it sounds like there is a better chance they will pay the difieciecey with a DIL...If you have any furhter advice, feel free to let me know:) Thank you very much.
hi
you should first discuss these options with the loss mitigation dept. of your mortgage company and check out if they will approve a short sale or a deed in lieu in this case. i'd also like to add that the amount that is forgiven by the lender will be taxable, though you can get a tax relief under the mortgage forgiveness debt relief act. why don't you modify your loan to reduce the payments? it can help you protect your credit score.
you should first discuss these options with the loss mitigation dept. of your mortgage company and check out if they will approve a short sale or a deed in lieu in this case. i'd also like to add that the amount that is forgiven by the lender will be taxable, though you can get a tax relief under the mortgage forgiveness debt relief act. why don't you modify your loan to reduce the payments? it can help you protect your credit score.
I am 74 and retired can't use my retirement income to pay a mortgage on a condo that is worth 120,000 less. If I sell it in a short sale which I owe by me alone I will be owning a 1099 for about $18,000 plus maybe a promissory note for $35,000 more or less. In this situation should I try for a DIL? I also own a condo with my wife free and clear. Could I get a deficiency judgment and put the condo at risk? if so how can I protect it
Hi genaro,
In my opinion, a deed in lieu of foreclosure will be a good option to get rid of the property. You should contact your lender and apply for it. This will not only help you in selling off the property but you won't be responsible for paying the deficient mortgage amount. Thus, you'll not be at a risk of losing your free and clear condo after the deed in lieu of foreclosure sale.
Thanks,
Jerry
In my opinion, a deed in lieu of foreclosure will be a good option to get rid of the property. You should contact your lender and apply for it. This will not only help you in selling off the property but you won't be responsible for paying the deficient mortgage amount. Thus, you'll not be at a risk of losing your free and clear condo after the deed in lieu of foreclosure sale.
Thanks,
Jerry