Deed In Lieu of Foreclosure Credit Score

deed in lieu of foreclosure

• Financing Repairs for a Fredericksburg Real Estate Fixer Upper

  Kim and I have posted a couple of articles now regarding the FHA 203K loan program.  This program is a good avenue to purchase a fixer upper foreclosure home in the Fredericksburg real estate market, and finance the money needed to make repairs.  For more information see the previous articles; More Details on The FHA 203K - Buying a Fixer Upper, How To Buy a Fredericksburg Real Estate Market Foreclosed Home that Needs TLC.  What I wanted to do this morning was put some feet to the words and let you imagine some ways to utilize this program.  The following photos come from one of the currently listed Fredericksburg homes for sale.  This particular home is a foreclosure, and has potential as an investment property.  But let’s assume that a buyer has been out looking to buy a Fredericksburg real estate property.  They see this home, and want to consider buying it as a primary residence.  The home is priced under $150,000, so it fits our buyer’s price range, but they do not have the cash needed to make the necessary repairs.  Utilizing the FHA 203k program, the buyer could purchase the home, and finance the repairs, which in this home includes some things like seen below. New Drywall Electrical Fixtures   New Door Frame Just some food for thought, on how to use this loan program, to realize the dream of home ownership in the Fredericksburg real estate market. - 18 months ago

• The Walk Away Option

  There have been allot of news reports about the "walk away option", that is to just walk away from your home. I do not believe it is as common as these reports make it appear but it can be a dramatic news story. From a community perspective, the home and your neighbors and family and you yourself deserve a more dignified resolution than that. If the bottom-line is just that you cannot afford your home than there are other options than just walking away from the property. "You may be able to sell your property at fair market value even if the sale's proceeds are less than what you owe on your loan**. This option provides you with an opportunity to sell your home quickly, while attempting to preserve your credit rating. At the close of escrow, if the short sale is approved, the proceeds are wired to us." - Countrywide Web Site The term "Short Sale" is to sell your property for less than you owe on your mortgage with your Lenders approval. This is a cooperative effort between yourself and your Lender to avoid Foreclosure and provide resolution to all involved. Short Sale Options Pre-Negotiate with Lender for Sale PriceThere can be tax consequences for the amount "short"Credit reporting should be negotiated with LenderSome Lenders will ask for a promissory note for the differenceThis is also a Negotiation so be prepared"You may be able to deed the property to the lender/servicer and avoid a lengthy foreclosure**. For information on how this will affect your credit rating, please consult an independent tax advisor. This option relays to the credit bureau that the financial situation was mitigated. If approved, the Deed-in-Lieu documents are forwarded to our attorney's office to complete the process." - Countrywide Web Site Deed-in-Lieu of Foreclosure is a voluntary return of the property in exchange for being released from the mortgage debt. You negotiate with your Lender to simply turn the property over to them without going through the Foreclosure process. The benefit is mostly emotional, that you can control how this unfolds. There is also the possibility of negotiating the credit reporting, timing and any future liability. Deed-in-Lieu of Foreclosure Options Voluntary forfeiting of title to the LenderNegotiate Credit ReportingNegotiate Timetable for leavingLender may ask for a promissory note for lossCan also have Tax implications** Countrywide Web Site advises consulting a tax professional. It is possible to have any forgiven debt considered as income by the Government. Existing laws address that and may reduce or eliminate any tax consequences. Links to the IRS web site and the White House statement on Mortgage Debt Forgiveness are on the right of this page. Contact a Tax Professional prior to making a decisions so you know all the consequences prior to committing to any course of action (many agencies offer free consultation). - 16 months ago

• Deed in Lieu of Foreclosure and Short Sales

  A deed in lieu of foreclosure aka (cash for keys) is when a home owner conveys all their interest in a property to the lender in order to avoid foreclosure proceedings. In the typical deed in lieu of foreclosure scenario, the mortgagee is in default i.e has not been making his or her mortgage payments. Proceeding with the deed in lieu of foreclosure offers advantages to both the home owner and the lender. The advantages to the borrower include the potential release from a large debt, less impact to your credit scores than a foreclosure, and also the avoidance of the public embarrassment of going through a foreclosure. The lender would consider a deed in lieu because it saves them the time and expenses involved with a repossession. Most often when a bank agrees to do a deed in lieu of foreclosure the fair market value of the property is what the lender will be looking to receive.   In many cases the current value of your home is much less than the remaining mortgage balance. In this scenario the bank may or may not agree to a deed in lieu. Most of the time a bank will not do a deed in lieu if there are 2nd mortgages, home equity loans, or tax liens against your property. Another option besides a deed in lieu is what is known as a short sale. A short sale is a legal lender approved solution designed to assist those home owners who are financially strapped to get out from under their mortgage debt. A short sale is negotiated through the mortgage holder of an owners home where by the mortgage holder agrees to take less than what home owner owes on the property. A short sale is the more common route to avoiding a foreclosure. In today's tough economic environment most lenders will now consider doing a short sale.                                                                                                                                               Remember banks are not in the business of owning Real Estate. They would much rather do a short sale than be saddled with marketing, selling, and possibly fixing up a home in order to sell. This is one of the biggest reasons why the short sale is the more common route to avoiding foreclosure than a deed in lieu. If you have come under financial stress and are considering a short sale to avoid foreclosure, I would recommend reading the article I wrote Foreclosure avoiding it through a short sale or loan modification. The article discusses in depth what a short sale and loan modification are and how they can help you get out from under your mortgage debt. Some of the comments in this article are as good as the post itself as many of them are written by Real Estate experts on the topic. If you live in the Metrowest Massachusetts area and are thinking about a short sale, I would be happy to discuss this situation with you confidentially. If you live outside the Metrowest MA area please feel free to get in touch as well. I am connected to a large network of Realtors and would be happy to put you in touch with a Real Estate agent that has experience with short sales in your area.   Notice of Foreclosure and Real Estate Lockbox & Foreclosure notice images are owned by Olivier Le Queinec at dreamstime.com and are copywrited. ______________________________________________________________________________________________________ The above information on Deed in lieu of foreclosure and short sales was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street. I have a passion for Real Estate and love to share my marketing expertise!  Thinking of doing a short sale in the Metrowest Mass area see Metrowest Mass short sale Realtor. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site. I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA. Click here to view Bill Gassett's Real Estate profile.       Subscribe in a reader   SUBSCRIBE TO MY METROWEST HOMES BLOG via email. Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years. - 11 months ago

• Foreclosure deed in lieu credit reports: What can you do NOW?

  I want to explore how your credit can be affected by deed in lieu of foreclosure or foreclosure. Your banks and credit cards report to one, two or all three major credit bureaus, often every month. What they say about you affects your credit score. Although there are three major types of credit scores, each one from a major credit bureau, the one that most lenders use is the FICO score. The best credit report about you is Paid Satisfactory, or Paid Never Late, Paid As Agreed, and Account Current. (But wait. Do you find this information valuable? Then you will want to instantly join my high value free email list and get much more valuable emails that are too sensitive to post on this blog. And you get instant access to my free 25 page report Keep Your Home, along with announcements of upcoming telephone seminars where you can ask questions about your own situation. You will also learn when my Mortgage Relief Formula is out and will be entitled to a special price on that. Your privacy is always assured and you can unsubscribe by clicking on a single link. Thank you!) There are reports which are neutral. These include Paid, Refinanced, Account Closed by Credit Grantor, Account Closed by Consumer. Account Closed by Credit Grantor may not be positive with regard to a loan officer looking at the report but for credit score purposes it is neutral. Now, let's look at negative reporting. First, there are lates. Current was 30/60/90/120 days late. That is what is going to show up if you are late on your mortgage loan but catch up. Usually, to catch up, you need to pay all the past payments along with late fees and special charges such as foreclosure or legal fees. Otherwise the mortgage company will not accept any payments. Partial payments must be negotiated as part of a loan modification or workout agreement also known as a forebearance. Then, as we get worse, there is charge-off, bad debt, delinquent, collection account. These are reports showing a condition of delinquency that is not going to change. It has happened already. However, that said, the credit grantor such as your mortgage company can in fact remove these and so you can negotiate with them on these as part of any workout, short sale or settlement. Don't believe them when they say they can't remove these. They can. And they can report "unrated" which is neutral and won't affect your credit score, but will remove any adverse reports they have made. There are also public record reports and these include bankruptcy, wage garnishment, judgments (paid or unpaid), and liens. The worst is bankruptcy. When you file for bankruptcy this hits the credit report even if you do not get a debt discharge or even if later on the court dismisses the petition for bankruptcy. Paid Settlement is adverse but not as adverse as many of these "bad" reports. If you are in foreclosure, or if you do a short sale, you may want the mortgage company to report Unrated, but if they will not, Paid Settlement isn't going to hurt you as badly as Foreclosure. What I want you to understand with respect to deed in lieu of foreclosure credit score is this: Foreclosure is what the home loan lender reports or a foreclosure or deed in lieu of foreclosure. So I suggest if you are negotiating with the lender, first try for Paid. If they won't agree, go for Unrated. This is little-known but is neutral and much better than an adverse report. It can undo already reported lates that the mortgage lender has made. If the mortgage company will not agree to Unrated, then go for Paid Settlement. It isn't nearly as bad as a foreclosure on your credit report. - 2 years ago

• Grant deed in lieu questions

  I have gotten a lot of questions about doing a grant deed in lieu. Someone asks, can they do a deed in lieu of  foreclosure if the lender doesn't agree to it. The answer is that when you transfer real property, you don't just sign a deed. You have to have the person or organization receive the deed, in an act known as delivery. So you can sign a deed over to your lender, but unless they accept it, you haven't done a deed in lieu of forelclosure. Lender approval is required. Another person asks, deed in lieu of foreclosure versus foreclosure, what is best? My answer is that a deed in lieu can be better than foreclosure because of two reasons. One, you save the lender costs involved in completing the foreclosure process. So it is cheaper for them and therefore less damaging. And also, you can negotiate when you are doing a deed in lieu. You can negotiate as to how they report the situation on your credit report, and you can negotiate whether or not they agere not to go after you afterwards for any deficiency. Yet another question I get is can you do a deed in lieu of foreclosure if you have a second mortgage? The answer is no. Generally not. You could conceivably do a deed in lieu of foreclosure to the second mortgage holder. They would only want to do this if you have significant equity already even after accounting for the first and second mortgage. These days, nobody does, so it isn't particularly relevant. And another question I get often is, what are the IRS tax consequences of deed in lieu? The answer is that there may not be any tax liability if you are technically what is known as insolvent at the time of the deed in lieu. The state income tax situation will vary state to state, but that's the federal tax implications of deed in lieu. Always talk to a tax advisor or a good lawyer though. And before you forget, make sure you subscribe to my hiqh quality email list where you will get instant access to my acclaimed 25 page report Keep Your Home, and emails that are too sensitive to post publicly. Plus you'll get advance notice of my Mortgage Relief Formula home study course which will launch very soon. Privacy assured. Thanks! - 2 years ago