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We own a home with my father in law. We have never made a late payment (past the 30 day mark) but our interest rate just jumped and it is becoming very difficult to make the payment prior to the 30 days late.

We have been weighing our options and are not sure what we should do. We owe $460 on our home and according to a few lenders/appraisers, our house is valued at $470 to $475. Our first and second loan are with different companies. We have listed the house but with the market the way it is, you can't get a 100% loan so whoever were to buy our home would have to come in a substantial down payment. That possibly will not happen.

Do you think a DIL is a possibility? My father in law just added my husband to the title a few weeks ago but my father in law is the only one on the loan. If a DIL is an option, who's credit will it affect?

Please respond asap.

Thanks

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Doris,

You should first talk to the lender and make your situation clear to him. See what the options are that he provides to you. There are lot's options like Forbearance or Mortgage Modification. If no options avail for you, only then you can request your lender for Short sale or Deed in lieu of foreclosure.

Deed in lieu of foreclosure is much better option than foreclosure because it will affect your Credit Score less than foreclosure. Deed in lieu of foreclosure will drop your credit score 80 to 100 points but foreclosure will drop your credit score 200 to 300 points.

I think both your husband's and father in law's credit will be affected but you father in law's credit will be more affected as his name is on the loan.

Thanks,
Larry

jenkin7 · Posted: Tue Nov 06, 2007 2:48 am Post subject:

Hello Doris,

Even I agree with Larry. You should talk to your lender first and see if he is willing to provide any alternative options for you to save the home.

Lenders generally do not accept a deed in lieu if there is a second mortgage on the home. He might ask you to go for a short sale.

If your father in law is on the loan, the deed in lieu will affect his credit.

Guest

I'm in the process of negotiating with my bank a DIL and my neighbor keeps telling me that is the same on my credit report as a foreclosure.

I'm in South Florida and this is the first blemish to my credit report. Can someone advise as to if it is the same?

Thanks,
Andy Rolling Eyes

Guest

Deed in lieu isn't the same as foreclosure. In case of dil, you surrender your property ownership to the lender who then sells off the home and retrieves the balance. Whereas in foreclosure, it's the lender who declares he would foreclose your property and sell it off at an auction. The credit effects of dil are less than foreclosure. Dil drops down credit score by 250 points whereas foreclosure reduces it further.

In dil, you don't need paying the deficiency unlike in foreclosure where the lender may file a judgment so that he can charge the deficiency.

Guest

To give the deed in lieu of foreclosure should I seek legal counsel for this or a financial advisor to help me with the process. Also, if I decide to do it myself what are the steps I should take to cover my self at the end from any financial credit disaster.

adonis · Posted: Thu Jan 01, 2009 12:30 am Post subject:

Hey Carmen,

Your query has been answered in the given link:
http://www.mortgagefit.com/problems/dil-legalcounsel.html

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DIL vs. Foreclosure? Options?