does a Deed in Lieu of Foreclosure affect your credit the same as a foreclosure would?
“Deed in lieu” just means you are almost foreclosed…but not yet. Further research may determine credit and financial ramifications of a deed in lieu vs. foreclosure but for credit purposes it affects your fico score about the same. Your portfolio lenders may treat it differently but most conventional programs would consider it about the same as a foreclosure.
A deed in lieu of foreclosure and a foreclosure have just about the same effect on credit. What a deed in lieu of foreclosure communicates to future financial institutions is that you knew you could not pay and were responsible enough to communicate with the bank and make arrangements to give the home back saving the bank money and time versus others who choose to stay in the home without paying forcing the bank to foreclose on them because they could not pay. In some cases consumers live in a home for a year paying 0 dollars… basically taken a free ride.
Thats assuming it was reported correct? lenders do not perform title search on the borrower as far as I know