Sunday, October 16, 2011

Deed in lieu helps you stay away from foreclosure

A Deed in Lieu of Foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. It hurts their credit less than a foreclosure does.

For further info take a look at:
Your credit score and foreclosures

FICO credit scores run from 300 to 850.  650 and below is considered to be 'bad credit'

Just how dinged will your score be if it started out as Excellent (above 780)?

Short Sale, deed in lieu of foreclosure, or settlement with balance
 wiped out  -115
Foreclosure or short sale with deficiency balance owed  -150