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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Real Estate Law
Satisfied Customers: 17441
Experience:  B.A.; M.B.A.; J.D.
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Will my credit be ruined if I do a deed in lieu of foreclosure

Customer Question

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.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Phillips Esq. replied 1 year ago.
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.
Customer: replied 1 year ago.
We do not have a financial problem.We have a medical problem Dr suggested we need to be nearer to hospital at this time so we have vacated the home and purchased a second home near hospital.Wells Fargo holds new home mtg also.
Expert:  Phillips Esq. replied 1 year ago.
Thank you for the clarification.
We do not have a financial problem.We have a medical problem Dr suggested we need to be nearer to hospital at this time so we have vacated the home and purchased a second home near hospital.Wells Fargo holds new home mtg also.
Response: Regrettably, if you do not have financial problem, the lender may not approve the deed-in-lieu. You may try to list the property with a real estate broker to see if you can sell it.

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