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.
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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
Hi Guest,
Once the deed in lieu of foreclosure is complete, it can be reported to your credit report and will stay in the credit report for 7 years. However, you should ask the lender to remove the existing "foreclosure" from your credit report.
Once the deed in lieu of foreclosure is complete, it can be reported to your credit report and will stay in the credit report for 7 years. However, you should ask the lender to remove the existing "foreclosure" from your credit report.
Unable to negotiate a lower payment or to get the timeshare company to take back the deed, I hired an attorney to do it. Upon completion of the process, my credit report shows "deed in lieu of foreclosure." Is the situation different because this was a timeshare instead of my primary residence? Please advise.
We filed Chapter 7 three years ago and included our house in the bankruptcy. We did not reaffirm it but have continued to live in it and make payments. Now we want to move - should we ask mortgage company to do a deed of lieu of? will they if we've continued making payments? Since house was part of bankruptcy will they foreclose and will it now show up on my credit report?