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Mortgage After Deed In Lieu of Foreclosure

Hello,
Hello,

After moving back to WIsconsin we had a home in Virginia that we tried to sell for 3 years.  Eventually the when trying to get better terms with BOA they purposed a DIL, just to so we could get out from it.  This closed on January 2012.  The whole time we had the house, we made every single payment, paid the association and maintained. Our credit is score is in the high 600's still so we were not hit two bad there. Now we find we can't get a mortgage for two years.  We have talked to a  number of people that say yes they can help but need to run a credit report, which dinks your credit score even more.  Does anyone have any idea who I can talked to to at least get mortgage for a couple of years after which I will be able to get a conventional mortgage.

Thanks,

Mike
  • May 24 2012 - Kenosha
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Answers (3)

As usual, the Lender gave an accurate answer.  This questions - short sale is same as Deed in lieu - is asked virtually everyday on Zillow Mortgage forum.  There are specific investor guidelines as Adel has itemized, and it is not "by company" as Agents mentioned. One very important consideration is though there is a time line, it is not the only issue. What caused the event is pertinent, and how finances have been handled since event is also important. If borrower had circumstances that caused event and those circumstances have been resolved, and job history, credit history/scores, assets, etc now reflect a stable scenario that is viewed positively along with metting min. time tables. Just meeting time table is not likely to be sufficient if picture has not improved significantly. Still dealing with issues i.e. late payments, collection acct, lack of assets, job gap, etc, would be obvious indication of higher risk, and approval would not be automatic or likely.
Past negative financial history takes time to resolve, and taking steps after such an event to have a solid footing is important to consumer and lender. "Past history has a way of repeating itself" is what both need to avoid.
  • November 15 2013
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Profile picture for AdelManuel
Hello Mike,

     Your options are going to vary depending on loan type and even then it will vary depending on a couple factors. 

    For a Conforming loan backed by Fannie Mae, it is 2 years from the date of the DIL if you put 20% down. After 4 years, they reduce it to 10% down. After 7 years, you can do a normal down payment.

    For a Conforming loan backed by Freddie Mac, it is 2 years for extenuating circumstances and 4 years for financial mismanagement. Based on what you said, they would probably catergorize it as financial mismanagement. But I wouldn't know for sure unless I knew the entire story. 

    For a FHA loan, it is 3 years from the date of the DIL.unless you can document extenuating circumstances and have reestablished credit. No loans will be considered before 1 year has passed.

    For a VA loan, it mirrors the FHA guidelines but add a couple wrinkles depending on if the VA suffered a loss on your DIL. I will not bore you with the details unless you ask.

       One key point to keep in mind is to take a look at your credit and see how the DIL got reported. A lot of times, the lender will report you as late and show it as a foreclosure which can complicate getting a Conforming approval. If the reporting of the DIL is messed up, it is better to know now so you can take steps to fix it versus assuming it is all good to go and then suffer a delay later on. 

    Feel free to contact me for more information.

Thanks,

Adel
  • November 15 2013
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Hi Mike,
You will have to wait for 2-3 years from the date of closing on the property. Once that time is up it shouldn't be a problem getting a loan from any bank or mortgage lender you want. Each company has their own set of rules but you should be ok after 3 years for sure. Just keep your credit good and it shouldn't be a problem. Any further questions, just let me know.
Thank you!!
  • May 25 2012
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