In article ,
Brigitte wrote:

If the alternative is foreclosure, why wouldn't the lender accept the "Deed
in Lieu of Foreclosure"? The lender doesn't have to go through the
"foreclosure" process, which can take up to a year in some places, while not
receiving any payments during that time. The lender also incurs greater
legal expenses in the foreclosure process. It seems it would be in the
lender's best interest to take the house back with payments up to date.
Seems also, that the "owner" is more likely to leave the home in better
shape than if they were foreclosed upon.


This is all true. I think you are referring to what is also called a 'quit
claim deed'. This is not possible in all circumstances. For instance,
if additional liens are attached to the property.


More to the point, a 'deed in lieu of foreclosure' is indeed reported on
your credit and can be just as damaging as a foreclosure. It's all up to
lenders how they wish to interpret it. Some see a 'deed in lieu' as less
negative, since it is voluntary. Many perceive it just as negatively as
a foreclosure sale. Freddie Mac treats the execution of a deed-in-lieu of
foreclosure exactly the same as a bankruptcy or foreclosure sale in terms
of credit reputation.


Dimitri