Hello: This isCustomer I am a licensed Attorney and I will be assisting you today.Will my credit be ruined if I do a deed in lieu of foreclosure on my underwater reverse mtg home.All taxes and insurance are current.Response:
No, it would not ruin your credit like foreclosure or bankruptcy, but your credit would be affected. Like foreclosure and bankruptcy, deed-in-lieu means that for one reason or other, you are no longer able to fulfill your financial obligation. So, your credit would be somewhat affected, but by how much, I cannot tell you that. Nonetheless, in order to be approved for deed-in-lieu of foreclosure, the lender would ask you to complete financial statement forms to show that you cannot afford to pay for your mortgage
anymore with your assets such as funds in your 401k plans
. Also, most lenders would require that the property be vacant. It is easier for the lender to take over and list the property for sale if the property is empty. However, most lenders shy away from deed-in-lieu because they do not want to assume incidents of ownership: general maintenance
of the property, insurance and property tax
payments; premise liability. So, the chances of Wells Fargo approving the deed-in-lieu are quite slim.