Posted: Thu Mar 26, 2009 12:26 pm Post subject: Specific questions about Deed In Lieu vs Short Sale
I should be more specific. I am current on my loan obligation (and all other financial obligations). I have not lived in my home and it has been listed for sale since June 2007.
I currently have a 731 credit score but cannot really forsee continuing to make payments on a home in which I do not live, cannot rent, and cannot sell.
Because I will continue to have revolving debt with 4 major credit card companies, I am most certainly concerned about my credit status. I do not wish to incur any "universal defaults" against me nor do I want my APRs to skyrocket. My two options are:
1) Proceed with the deed-in-lieu. I would have to repay $12,000 over 100 months or lump-sum payment of $6,000 once title signed over to Fannie Mae; or
2) Keep my house on the market and cross my fingers for a short sale. The benefit to this is the shorter amount of time to be once again eligible for another mortgage AND I have heard that this has less of an adversarial effect on my credit standing.
In both situations, the loan would be reported as "not payed as agreed." I believe, however, that because I have no other negative information on my credit history and my obligations are current, that I should take less of a "ding" on my credit but cannot confirm. Not through the credit reporting agencies (I called TransUnion and Equifax this morning), the lender (they actually told me that they do not provide this information), or a cerdit counseling expert (also HUD certified).
HELP! What is my best option? I really need to get rid of the home, but with as little impact on my credit as possible. I can't contnue to be punished because of market conditions. There's NO WAY I can sell the house for the outstanding principal -- maybe 45% at best through a short sale, but with as many cheap houses on the market, people will pass up my property for sure!!
HELP!!! HELP!!! _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
You are certainly not in a great situation, basically which is the less of the two evils. Either way, it is going to hurt your credit. If you decide on the deed in lieu, you may pay less back to the lender. If I understand you correctly, you think your house will sell for 45% of the current balance? If that is the case, there will be a huge balance left over. The lender may make the terms of the short sale as follows: You will have to agree to make a certain monthly payment to pay back the difference over a number of years. I hope this helps you. _________________ Karla A. Sitko
Sr. Mortgage Banker
"Your Interest Is My Priority!"
www.LowerMyMortgageRateNow.com
Guest Reply Guest
Posted: Fri Aug 07, 2009 12:18 pm Post subject:
Yes, this is correct but the lender stressed that I woul dpay more monthly doing a deed-in-lieu. With the short sale, their out-of-pocket is reduced, so they penalize you less...with the deed in lieu, I was asked to sign a promissory note for $16,000!
Because there have been no offers in 2 years (and with three realtors), I have now been prompted by my realtor to reduce the selling price to 80% less than my purchase price to encourage an offer -- how much will my credit score drop AND how much will I have to re-pay after paying close to $30K in mortgage payments just over the last two years alone...do the lenders think we're crazy or that this is fair? Talk about indentured servitude!! This is unconstitutional!
If you short sale the property, then your credit will go down by 75-100 points. Though you short sale the property, you would be liable for the deficient amount resulting from the sale of the property. You can set up a payment plan with your lender and try to pay off the dues. _________________ Procrastination is the enemy of your financial success
jameshogg
