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Deed In Lieu Of Foreclosure And A Good Credit Score - How To
Escape
Foreclosure With Good Credit
By
Richard Geller
Nowadays a
lot of people are investigating deed in lieu
of foreclosure.
In this process which is also called grant
deed in lieu of foreclosure, or just
deed-in-lieu, you give your property back to
your mortgage lender the easy way. You sign
a grant deed transferring title to your
lender.
In return, the lender stops the foreclosure
that is going on.
You do not need to be in foreclosure to do a
deed in lieu. But lenders won't pay
attention to you in many cases unless you
are in foreclosure or at least are
delinquent. This is not always the case,
though, depending on the lender.
What people do not realize is that certain
points must be negotiated when you talk
about a deed in lieu with your mortgage
lender.
How will they report your credit to the
credit bureaus?
Most of the time, unless you negotiate
otherwise, a deed in lieu is reported as a
foreclosure. It's no better on your credit
report than letting your house go to a
trustee sale or sheriff's sale.
The mortgage company will insist that they
can't do anything about this, but they can.
They can report, ideally, "PAID -
SATISFACTORY" but if they are unwilling to
do this, "PAID - SETTLEMENT" is okay too.
You don't want a foreclosure on your record.
The lender can't do anything about a public
record but they can change how they report
your credit.
Ask them about "unrated" or R0, which is
even better. The loss mitigation person may
not know what this is but it is really nice
because it removes any late payment reports
and other derogatory information.
The other thing you can negotiate is that
they will not pursue you to cover the
deficiency in what they get when they
finally sell your house, and what you owe.
This is crucial because otherwise what is
the sense of doing deed in lieu of they
expect you to pay for their financial
losses?
Remember that deed in lieu doesn't solve
your lender's problem. They want the money
not your house. If they accept your deed in
lieu of foreclosure, they must fix your
house and sell it. That can cost them a lot
of money.
Some estimates are that lenders recover only
$0.68 on the dollar lent out when they do a
foreclosure. So you can see why the last
thing they want is your house.
That's why I suggest you check out options.
That may well be a short sale instead of
deed-in-lieu.
I wish you the best of luck in your
situation and although I wish I could be
more encouraging about a deed in lieu of
foreclosure, short sales are more likely to
pan out for you these days.
Conclusion
Are you one
of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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