Deed in Lieu of Foreclosure

[Anonymous]

My brother is doing a deed in lieu. Any advice to offer him for rebuilding?

Probably not something the bank would just GW.

[koky]

I think the best Forum to get an answer for this type of question will be the Mortgage forum....

[Anonymous]

Any ideas?

[Lel]

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@Anonymous wrote:

My brother is doing a deed in lieu. Any advice to offer him for rebuilding?

Probably not something the bank would just GW.

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There really isn't anything special about rebuilding after a DIL.  A goodwill deletion is highly unlikely, especially since it would probably be technically illegal for the bank to alter the reporting of this sort of delinquency.  Even if, by some miracle, the DIL is removed from his credit reports, there will always be a record of that transaction that will resurface during the title search process of a new loan application.

Ongoing prudent management of debt, limiting the amount of new credit that he seeks, etc - the typical things - are what he needs to slowly recover from this unfortunate situation.  If he's looking to buy a home again in the future, then FHA would probably the best option since it allows for a shorter waiting period.  I believe DILs are treated the same as foreclosures with regard to qualifying for mortgages again in the future.

[Anonymous]

What do you think the timeframe would be for acquiring another mortgage? Think 2 years is possible?

The DIL still hasn't hit his CR yet, so his FICO's are still around 760.

He hates renting and would like to buy again ASAP. His last house was about 50% underwater (ouch). Seems like a great time to buy in his area though.

Homes in my area didn't suffer that bad and are climbing in value pretty quick. 

[Lel]

I believe the waiting period after DIL for a conventional loan is 2 years, as long as the new mortgage has a LTV of 80% or less.  I assume that the waiting period for FHA is the same, if not shorter depending the the borrower's qualifications.

Since this DIL is fresh - sounds like it has just gone through - he's going to have to be content with renting for a while longer.

[birjest]

Well, from my experience, I did a deed in lieu in 2009. The DIL was recorded and completed FEB 2009. In 2009, my score was horrendous. However, In 2011, my TU was a 705 as well as my Equifax sitting at 695. In December of 2011, I moved forward on applying for a new home with FHA. After FEB 2012, I was free and clear to purchase a home. Of course, I had to explain my deed in lieu, which was due to a military transfer. September 2012, I closed on my FHA's loan with a midscore of 668. The company I went with require a 640, and yes...there were some conditions that had to be met. So in closing, there is a 3 year wait to purchase a home with those with a dil. I just can't wait to have the DIL to come of credit report in 2015. I am wondering, just how much points my score will go