A deed-in-lieu will have negative impact to your credit score too but the effect will be less compared to bankruptcy. _________________ Lets help each other. Try my blog
Deed-in-lieu is an alternative to foreclosure used by the debtor under acceptance of the lender.
It can be used under limited circumstances and only if the lender agrees. There are some conditions under which the lender may accept a deed-in-lieu.
First if the debtor has exhausted all efforts to sell the home at a fair market value. Second there should not be any other mortgage in default. Third the debtor doesn't have the ability to make the monthly payments.
Generally the lender accepts a deed-in-lieu if the above conditions are met and there is no other option left than a foreclosure. You should think for a deed-in-lieu only if you have a place to stay.
Bankruptcy will give an option to have automatic stay. If you are in bankruptcy, legal action can not be taken against your house at least. But it may ruin your credit history more. Depending on your situation you have to take a decision.
A Deed in Lieu of foreclosure (DIL) is an option in which a homeowner voluntarily deeds the home to the mortgage servicing company in exchange for a release from all obligations under the mortgage.
The question as to how the DIL will affect you depends upon how this situation is actually reported onto your credit. If you are not delinquent on your mortgage payments but some event allows you to know that future mortgage payments will not be possible, it is possible that the mortgage company may accept a Deed in Lieu to future mortgage obligations. But this process of acceptance may take as much time as it would to sell the property outright.
If mortgage payments are delinquent, most mortgage servicers have strict policies regarding a timeline of filing foreclosure proceedings. Even if the servicer has been advised in writing that the homeowner is interested in deeding the property over … the foreclosure is usually started on the lender’s standard timeline as a form of legal protection against loss. If foreclosure is initiated, a foreclosure will be reported on your credit and this will affect your credit worse than a bankruptcy from a mortgage lenders point of view.
As Samantha mentioned, bankruptcy may even be considered an option worth considering if you need to avoid foreclosure. Whether you are considering a Deed in Lieu and/or facing foreclosure, consultation with a reputable real estate attorney is highly advisable to ensure you are making the best decision given your specific circumstances.
The key to any situation with regards to your credit is to work closely with the mortgage servicer and/or attorney to ensure no foreclosure is initiated and that the end result is your former mortgage simply reports on your credit as “Paid/Satisfied”.
Hope this helps … Best of Luck! _________________ Bill Clanton is a Mortgage Specialist and Manager of State Street Mortgage of Illinois. StateStreetMortgage.Net
Posted: Thu Apr 06, 2006 9:01 pm Post subject: RE:
Hi,
As Zeal_Deal said this entirely depends on the lender.
Negotiating a short sale with your lender can be a daunting task. Because finding an officer who has the authority to accept discounts can be a difficult process.
You will have to locate the loss mitigation department of your lenders company.
Why do you want to "qualify" for a short sale?! _________________ Bill Clanton is a Mortgage Specialist and Manager of State Street Mortgage of Illinois. StateStreetMortgage.Net
king4609
