How Mortgage Companies Treat Deed In Lieu…

Mortgage and Lending with Berkshire Lending, LLC

small-brett-pic1I get asked about “Deed In Lieu” sometimes.

A Deed In Lieu is where you beat the mortgage company to the punch… …and give the mortgage company back the house before they have a chance to foreclose.

People ask me how a Deed In Lieu would affect their credit.

I tell them that it would be treated the same way a full foreclosure would – from a mortgage perspective anyway.

…in fact, if you have a “Deed In Lieu” show up in the mortgage history on your credit report – it might as well say “Foreclosure”.

You will have to wait a period of time before you would be eligible for a new mortgage.

…here’s what you’re looking at for seasoning on a foreclosure:

Fannie Mae/Freddie Mac: 7 years.  (Sometimes you can get automated approval after 4 years)

VA: 4 years.

FHA: 3 years.
That’s it for today!

I hope you have a great day! Thanks for reading!


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Comments (2)

Andrzej Niemyjski
Realty One Group - Sun City West, AZ

Why would anyone do "Deed In Lieu" besides getting this whole situation behind them?

Oct 06, 2015 11:56 PM
Certified Mobile Notary Signing Agent - Smith Mountain Lake, VA
Highest Ranked Certified Mobile Notary in Virginia

As always, the trick is for homeowners to not "stick their head in the sand".   If a borrower realizes they are going to have issues and will contact the lender, we can often work with them through their issues and possibly save their home and their credit.   The key is early recognition and early action

Oct 07, 2015 12:14 AM