How bad is a previous foreclosure on credit?

Property foreclosure is one of the most damaging events in a borrower's credit history.  If you are faced with a foreclosure, you might want to consider speaking to your lender about giving a deed in lieu of foreclosure or trying to sell the property so that a short sale could be arranged.  In the event the lender is willing to accept the deed in lieu of foreclosure or work with you in connection with a short sale, that will not be as damaging as a forced foreclosure.  However, you will not be able to do either a deed in lieu of foreclosure or a short sale if you have a junior mortgage or other attachments or liens against your property.  In order for the short sale or the deed in lieu foreclosure to work, you need to have a clean title other than the mortgage which is being foreclosed on.  If you have a junior mortgage you will need to speak to them first to be sure they would be willing to discharge their mortgage in order to permit the deed in lieu of foreclosure or the short sale.  If they refuse, then you will not be able to try to work with your lender to achieve a deed in lieu or a short sale.

If you have questions about this or any other real estate matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.