Credit Score in Carmichael>Question Details

Rome Ny, Home Owner in Carmichael, CA

deed in lieu vs short sale which is better on credit?

Asked by Rome Ny, Carmichael, CA Tue Feb 8, 2011

California home, current on payments. House is 40% of what i paid in 2007 and my income is down $20k year. I have heard that deed in lieu recorded as paid in full or unrated will not have a huge impact on your credit. I have 800 now and I can't afford to cont. to make paymts. I want to be able to buy a less expensive home with lower payments. If it does affect credit how much of a hit can I expect?

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Both will have the same negative impact on your credit score. Be sure and consult a real estate attorney (who has handled both typesof mortgage relief ) BEFORE you sign off on ether option. Your attorney will want to make certain the mortgage company includes specific language regarding "deficiency judgements" that can come back to haunt you.
1 vote Thank Flag Link Tue Feb 8, 2011
A short sale is the way to go.
You will have a credit impact for payments you don't make probably for a couple of years.

on the deed in leiu is the same as a foreclosure.
You will have major credit impact for 7 years.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Thu Feb 10, 2011
Hi Rome: Short Sale will have a less impact on your credit. Your credit score will drop drastically doing a deed in lieu since it is still a foreclosure record. However, it will stay on your credit much shorter period of time compared to having a foreclosure.
0 votes Thank Flag Link Tue Feb 8, 2011
Neither is good, but I would check with a local mortgage broker and see what their opinion is.
0 votes Thank Flag Link Tue Feb 8, 2011
Short sale is not a mark on your credit like a deed in lieu or any type of foreclosure would be on credit. State specific terms could prevent you from purchasing another home for 2-3 years after doing short sale. Having any type of foreclosure would put you out even further. Your loss of income is your hardship. I can recommend an agent in your market who specializes in short sale negotiations. if you would like help
0 votes Thank Flag Link Tue Feb 8, 2011
Hello Rome,

Deed in lieu and Short sale avoids foreclosure and attorney's involvement (state by state). Both shows the lender/servicer that borrower has intentions to avoid foreclosure. Credit-wise in my opinion a short sale is better.

Please email Paul at he might have the best answer for you.

Have you tried a loan modification?

Good Luck!
Web Reference:
0 votes Thank Flag Link Tue Feb 8, 2011
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