Can you get a home loan after you have done a deed in lieu of foreclosure?

This is another question I get quite a lot.

A deed in lieu of foreclosure results in a foreclosure report to the credit bureaus. This lowers your credit score, a deed in lieu does, often 50 - 150 points. Maybe worse. There is essentially no difference between voluntarily transfering title of your house to your mortgage lender, and a foreclosure. Not as far as the credit bureaus are concerned.

You could of course negotiate with the lender. They may agree to report "PAID - SETTLED" or even "PAID - SATISFACTORY" on your home loan credit report, although they will likely be tough to deal with in this regard. You should always get a written agreement where the lender agrees not to go after you for anything more. This is a waiver of deficiency and if you don't get this, in some cases they can go after you for the financial losses they have incurred even after the deed in lieu.

There are two answers if you want to buy another house after a deed in lieu of foreclosure. One answer is you can rent and pay on time and rebuild your credit and in a year or two you may be able to qualify for a loan. Another answer is that you may find a deal with little or no money down and no qualifying. You can often buy a house nowadays without getting a new loan. Find a house with an existing loan on it, and take the house subject to the existing loan. Presto, you are a homeowner. And you didn't have to qualify for a new loan.

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