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
It was our experience that the credit rating after the deed in lieu was not injured at all, but we did not have any 30, 60, or 90 days late marks on our mortgage, the equity in the home was completely negative, we lost every bit of it during the market crash in our area. The bank did not walk away with our equity, and there will not be a delayed attempt to get taxes, there was not recouping of any monetary advantage. It was simply a jubilee. :shock:
how long before a forecloure is taken off of your credit report in Nevada?
Hi kb!
Welcome to forums!
Like any other negative item, foreclosure will remain on your credit report for 7 years. This is irrespective of the state where you live.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Like any other negative item, foreclosure will remain on your credit report for 7 years. This is irrespective of the state where you live.
Feel free to ask if you've further queries.
Sussane
I am a Realtor that has just sold a property as a Short Sale. The seller is concerned about the deficency judgment and now after several months of negotians she want to cancel the deal which is supposed to close Oct.29th. What rights do the buyers have and what else can she do to avoid the judgment?
I have a client whose condo I am trying to sell for a while now but no luck. We have reduced to the price to only $2,000 more then he owes the bank ($223,000) plus he is willing to pay out of pocket $8000 toward his closing. We still have had no luck. Everyone who sees it all have the same response, "don't like the location".
He is now looking to purchase a home, because he is going to be getting married. His current residence is not accomodating so he is thinking of doing Deed in Lieu of after he purchases the new home. Even if he rents out the old place he still has to put $700 a month toward is. What should he do?
He is now looking to purchase a home, because he is going to be getting married. His current residence is not accomodating so he is thinking of doing Deed in Lieu of after he purchases the new home. Even if he rents out the old place he still has to put $700 a month toward is. What should he do?
Same old story for us-- we bought a home for 700,000 a few years ago, and now the value is about 500,000. We did an arm, with zero down, which in retrospect was dumb. But my income is quite high, but it just seems stupid to keep throwing money into this home... We may need to move for my job-- would others just short sale or foreclose, then start fresh? Thank you
Hi Hy. R.,
After a short sale, the borrowers are liable to pay the balance amount if they are not staying in a non-recourse state. Thus, the lender can sue her for the deficient balance. She won't be able to avoid it unless the lender forgives the amount. If a formal agreement has been signed between the seller and the buyer regarding the property sale, then the buyer can sue the seller.
To Ann,
Your query has been replied to in the given page:
http://www.mortgagefit.com/propertytransfer/about44876.html#186036
Take a look at it. Hope it helps you.
To Guest,
Rather than going for a short sale or a foreclosure, you should contact the lender and apply for a deed in lieu of foreclosure. This will not only help you in selling off the property but you won't be liable for paying the balance amount. But it'll lower your credit score by 250 points.
Thanks
After a short sale, the borrowers are liable to pay the balance amount if they are not staying in a non-recourse state. Thus, the lender can sue her for the deficient balance. She won't be able to avoid it unless the lender forgives the amount. If a formal agreement has been signed between the seller and the buyer regarding the property sale, then the buyer can sue the seller.
To Ann,
Your query has been replied to in the given page:
http://www.mortgagefit.com/propertytransfer/about44876.html#186036
Take a look at it. Hope it helps you.
To Guest,
Rather than going for a short sale or a foreclosure, you should contact the lender and apply for a deed in lieu of foreclosure. This will not only help you in selling off the property but you won't be liable for paying the balance amount. But it'll lower your credit score by 250 points.
Thanks
THIS IS ON MY REPORT AND NEED TO KNOW IF IT WILL EFFECT MY PURCHASE IN 2011?? I DON'T UNDERSTAND DEED OR COLLATERAL?
I have an 80/20. Both mortgages are owned by the same bank. I dont want the house anymore, cant sell it and want to proceed with a deed in lieu. My question is, will the deed in lieu cover the 1st and 2nd mortgage? Or am I responsible for the 2nd?
hi gatorgirl!
welcome to forums!
you will be responsible for paying off the deficient balance resulting from the second mortgage.
feel free to ask if you've further queries.
sussane
welcome to forums!
you will be responsible for paying off the deficient balance resulting from the second mortgage.
feel free to ask if you've further queries.
sussane
Mortgage company rep (deed in :ieu) suggested that I borrow money to move in November 2010. She said the company would get money back to me by the end of Nov. Needless to say I am still waiting. Do I have any recourse? :cry:
Hi lady v,
Your query is not very clear to me. Nevertheless, I will suggest you to contact the representative and clarify as to when you'll receive the money.
Thanks
Your query is not very clear to me. Nevertheless, I will suggest you to contact the representative and clarify as to when you'll receive the money.
Thanks
I was thinking about making an offer to my mortgage company for a Deed in Lieu of a Foreclosure with the following conditions:
I figure in January, they still haven't started the Foreclosure process yet...and they could avoid having to invest all the money associated with foreclosing on me, and get the property turned over to them in good (livable) condition with appliances from me. I just need the extra time to try to find a new job (preferrably in a new state) to move to. I don't want to move into temporary housing local, only to move again 3 months later.
My question is: Has anyone ever heard of someone doing this successfully? Also: I barely heard someone say they once heard of a mortgage company paying a person to vacate a property. Ever heard of this?
- I would be allowed to occupy the property until 1 July 2011
I would immediately notify the mortgage company if property was vacated before 1 July 2011.
All appliances would be left in working condition with the property upon early vacancy.
All utlities (gas, electric, water) would be maintained and current until 1 July 2011.
Property could be inspected by mortgage company, and property would be left in reasonable condition upon vacancy.
I figure in January, they still haven't started the Foreclosure process yet...and they could avoid having to invest all the money associated with foreclosing on me, and get the property turned over to them in good (livable) condition with appliances from me. I just need the extra time to try to find a new job (preferrably in a new state) to move to. I don't want to move into temporary housing local, only to move again 3 months later.
My question is: Has anyone ever heard of someone doing this successfully? Also: I barely heard someone say they once heard of a mortgage company paying a person to vacate a property. Ever heard of this?
Welcome miskryie,
It is quite difficult for me to let you know whether or not the lender will consider such a request. Nevertheless, you should contact your lender and let him know your plans. The lender will be the best person to help you know whether or not he will accept your request.
It is quite difficult for me to let you know whether or not the lender will consider such a request. Nevertheless, you should contact your lender and let him know your plans. The lender will be the best person to help you know whether or not he will accept your request.