How much will your credit score drop after a deed in lieu?
A deed in lieu of foreclosure is a document wherein a borrower or mortgagor conveys to a lender or mortgagee the rights to a real property. This is done to satisfy a defaulted loan and prevent foreclosure proceedings.
There are many advantages in a deed in lieu of foreclosure, both to the benefit of the mortgagor and mortgagee. The main benefit the mortgagor or borrower gets is instant relief from all or most of the indebtedness he or she has due to the delinquent loan. The mortgagor also prevents him or herself from being associated with the negative effects of involvement in foreclosure proceedings.
The mortgagor may also be able to take advantage of better terms, as opposed to a formal foreclosure process. The lender or mortgagee may gain in significant ways as well, as the effort, time, and cost of repossession will decrease. There are also more benefits if the borrower declares bankruptcy.
If a borrower is unable to pay for the mortgage, but cannot sell the property or restructure payment plans, he or she may choose a deed in lieu of foreclosure. Here, the mortgage company or lender is given the ability to put the property up for sale to salvage the balance of the loan.
Is credit score affected by deed in lieu of foreclosure?
A deed in lieu of foreclosure can make a negative impact on credit score. An individual may lose 250 or so points with this. The credit report will reflect the deed in lieu for seven years, although a borrower can still rebuild his or her credit. However, the ill effect on the credit score gradually lessens in time. An individual may request its removal from a credit report towards the closing of year seven.
About Moe Bedard
I’m currently working with national home savers pro and have a loan through wells fargo. We are 12 months behind but have started making monthly payments. they keep turning us down for a repayment or loan modification but then tell us to reapply. National home savers pro is giving me different information then wells fargo and I’m about to have our 5th child in a week. My husband works over seas in Iraq as a contractor for the military and we can afford the payments now but not the 16k or so we’re behind. Do you have ANY suggestions for me? who should I be trying to work with or listen to wells fargo or national home savers pro? I really do not want to lose my house!
we have a fixed 6% va loan that we pay taxes and home owners through 30 year fixed, originated in aug 05, 0 down and we owe 158k on it.
You should contact (NACA) look this up on the web , the company binding contratcs with wells fargo to redo your loan.
I am working with Mrs. Homes on the loan modification. At the moment the loan is under review for assistance and the negotiatior on the file has contacted us regarding the process and stated that the clients are under review for a lower rate and monthly payment. The last note stated that the client spoke to collections that had no notes from loss mit dept and just tried to collect a fee.
We contacted Martina Holmes Lender and confirmed the lender would not approve the loan modification because the homeowner did NOT meet the guidlelines to get approved for any program. National Home Savers Pro did not collect 1 cent up front and worked diligently to get her approved for ANY assistance. Once denied we explained the situation to the client and never charged for any of the work.
We care about our clients and want to make sure we assist in this process and not break any homeowner.
Thank you