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0 late/deed in lieu vs. 90+ late/short sale?

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Anonymous
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0 late/deed in lieu vs. 90+ late/short sale?

Hi, I am new to this forum and looking for a non-biased answer (sorry I don't trust my realtor with this one!).  I am current on everything reasonable FICO score (670ish), but I have to move out of state to get care for my disabled son.  House has been on the market 4 months, no movement. It is presently listed at about 20% below mortgage payoff.  I am at the point now where we have to move in 2 months, and I can't afford to make the mortgage payment AND pay rent (nor can we rent our house out here because rental value is 800 less than mortgage payment).

 

I had decided on my own that if it wasn't under contract by June, I would just do a deed in lieu and give it back to the bank with no late payments.  My realtor says I am crazy, that you are always better off doing a short sale, even if it takes 6-8 months to close it.

 

So, assuming that I can actually get a buyer EVENTUALLY, and the bank does not foreclose, what is the difference in impact of 120+ late payments but everything else current and short sale is listed as paid-satisfied, versus taking the hit on the foreclosure with no late payments?

 

 Many thanks, and any advice for getting out of this pickle would also be appreciated!

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Anonymous
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Re: 0 late/deed in lieu vs. 90+ late/short sale?

I can't answer your question in regards to the effect on your FICO score.  However, generally a foreclosure, voluntary or not, will prevent you from obtaining another mortgage for at least 3 years.

 

A foreclosure is a major derog, like a judgment or a tax lien.  Besides, with late payments, you can possibly GW the bank for removal.  With a foreclosure, its just there for 7 whole years, with little chance of removal.    Just my thoughts...

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Anonymous
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Re: 0 late/deed in lieu vs. 90+ late/short sale?

Thanks for the advice! My realtor also seems to think that if we can get a short sale to the bank, they may be willing to negotiate the late payments down.  But she is biased by wanting to earn a commission so I was seeking objective opinions. I tend to agree with you that a foreclosure is something that can't be negotiated off your file.
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