how does a deed in lieu of foreclosure affect credit?

Answer 1

If you can get the lender to accept it (not likely, most lenders will not accept "deed in lieu" because they need foreclosure to clear the title) it will still reflect negatively on your credit, not paid as agreed and delinquent payments.

Answer 2

It always amazes me how people only worry about their credit when they are facing foreclosure. I don't mean to criticize but that should have been priority one when you started having trouble meeting your payments. I would be very surprised if a lender accepted the deed in lieu of foreclosure. They are generally more palatable to private investors that don't have the time or the legal and collection departments to do the foreclosures.

The other reason a lender will not accept the deed is in a foreclosure, the lender is entitled to seek a deficiency judgment against you which gives them the right to go after all of your assets until the total amount is satisfied.

But it doesn't hurt to ask. Hopefully, this isn't your first correspondence with them. They will definitely not cooperate if you have been hard to track down.

Good Luck!

Answer 3

Jimmy is right, but a deed in lieu will not look nearly so bad as a foreclosure. This way, potential creditors in the future will see that you knew you were in trouble, and took steps to resolve rather than letting it go.

Answer 4

It's not good. Think about the future, do you want to have good credit and be able to buy another house?

I think that you can get help from local private investors like attorneys or real estate brokers to get the money you need to keep the house.

They might want to rent it out or lease-option it but. . . in the end you've got to evaluate ALL potential options to save yourself from "giving up" on your credit and finances.

It all comes down to how much you care.