How Deed in lieu of foreclosure will affect someone credit report?

Question:

Due to financial hardship house is going into foreclosure. I tried to get a loan modification which was unsuccessful. Now I have three choices: 1) put the house on the market and hope to get it sold before a foreclosure date. 2) get a short sell and have to paid the difference. 3) Deed in lieu of foreclosure.

Answer:
You list your options in the exact order that you should pursue them. One other option is a Chapter 13 bankruptcy. This allows you to repay the delinquent amounts in a plan over the course of 36-60 months. If you have the income to pay the current mortgage plus the amount necessary to cure the deficiency, this may be the way to go. Also, you should talk to a qualified consumer credit counsellor who may be able to help you with a loan modification. Finally, if your loan is FHA insured, there are specific regulations to which the bank must adhere. If you meet the criteria for a loan modification and you are FHA insured, they cannot turn you down. Just because you got a no answer once doesn't mean that you should not try again. You also may be able to refinance depending on your credit and equity situation.

I would think the only one that could actually help you is if you can sell it BEFORE the foreclosure date. I went through the same thing. My attorney told me that a deed in lieu still looks bad on your credit b/c it still shows that you could not pay for your house. Dont do what I did, I thought they would give me some time to sell the house and I waited too long. My house got foreclosed on taken right from me!!

A deed in lieu will have a dramatic negative effect on your credit scores, similar to a foreclosure. This will remain on your report for 10 years unless you e able to negotiate, as a part of the deed in lieu process that the lender cease reporting your account to the bureaus. They may not agree, but it is worth a shot as your deeding them the property will greatly reduce their loss.

Deed in Lieu of Foreclosure is essentially the same as a foreclosure as far as your credit rating is concerned. It may have an infinitesimally lesser impact but it will hurt your credit quite a bit.

With a short sale, you may be able to negotiate what the lender will place in your credit report. It never hurts to ask.

How Deed in lieu of foreclosure will affect someone credit report?

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