Posted by MJ on July 16, 2006 at 06:33:16:
Sadly I am experienced in this, as I had to give a Deed in Lieu to a lender when I couldn’t pay the mortgage on an investment condo. It did, indeed, go on to my credit report, and it took about 4 years to season before I could refi my house. I like the idea of deeding the property to another entity, and then letting that entity tender the DIL
Deed in Lieu Of Foreclosure - Posted by TH
Posted by TH on July 15, 2006 at 14:05:38:
I have a “foreclosure options” report that I wam making, and am wondering if anyone can shed some in depth light on how a “Deed In Lieu of Foreclosure” works. If a seller really wants to go this route
1)how do they do so
2) what effect on credit does it have?
Appreciate the insight,
Re: Deed in Lieu Of Foreclosure - Posted by Sue
Posted by Sue on July 19, 2006 at 08:12:53:
My sister did that and at the end of the year they got a 1099 stating it as income they had to claim.
I wans’t for the full amout but it was a huge chunck of chagne, over half.
Re: Deed in Lieu Of Foreclosure - Posted by Dan O’Connor
Posted by Dan O’Connor on July 15, 2006 at 18:05:55:
Presuming this is a conventional loan and not a private lender…and there are no other liens attached:
1)If the lender is agreeable, a Deed is prepared and signed by the homeowner, then given to the lender in addition to details such as a date for vacating the property, etc. Some lenders may request a closing happen at a title company while others simply accept a Deed via FedEx. Once the Deed is received, it’s a matter of eviction vs foreclosure if the previous owner is uncooperative.
2)My experience with a Deed in Lieu is that it does not show up as a foreclosure on the borrower’s credit report (obviously) and is reflected as a satisfied account.
Re: Deed in Lieu Of Foreclosure - Posted by Joe Kaiser
Posted by Joe Kaiser on July 16, 2006 at 02:21:00:
A deed in lieu is traditionally given as a "get out of jail free card,"
meaning the lender waives further collection activities as to the unpaid
mortgage.
Standard loan applications often ask, “have you ever given a deed in
lieu of foreclosure,” and answering untruthfully could be a problem.
So, while there may not be a credit reporting issue, there is a future
loan application issue. A clever investor may want to consider deeding
his property to another entity and let that entity tender the deed in
lieu.
Joe