Credit score after foreclosure or deed in lieu

[calgirl67]

We got our Ch 7 discharge in June and are getting ready to get rid of this house after 4 failed loan mod attempts.

My question is: the mortgages were discharged BUT if we let it foreclose does our credit score take another hit? I know a foreclosure is public record and goes in the pblic record section on your credit report but they cannot report it on the loan part anymore.

If a foreclosure is going to ding our credit scrore even more, versus a short sale or deed in lieu NOT dinging our score....

Please advise!

[goodyphilips]

From what i know foreclosure affects your credit score adversely and that deed in lieu is a better option.

[HHM]

A DIL does adversely affect your credit. But not in the same way as foreclosure. Where a foreclosure dings your credit, as a whole, a deed in lieu more specifically impacts your ability to get a future mortgage. For both DIL and foreclosure, it will be 3 years before you will be eligible for an FHA mortgage.

[amcink]

That last post was not clear. Dos the DIL affects more than a Foreclosure?

[ryan]

I think what HHM was saying is that a DIL has a more specific and negative effect if you are trying to get a mortgage. It does not impact other things as badly. A FC, on the hand, affects mortgage prospects negatively AS WELL AS ALL OTHER CREDIT.

[NoMoreCards]

Forgive me, but I think I am misunderstanding this a bit.

Since the mortgages are discharged, and the owner walks away later I was under the impression that the credit report would not show a foreclosure or take another "ding".

I understand that for getting a new mortgage, it will show up and force the 2-3 year wait, but the foreclosure should not otherwise show. So if the owner went to buy a car next year, the foreclosure would not show on the basic credit report.

This is my understanding, and perhaps it is wrong based on this thread?

[HHM]

Incorrect, the foreclosure will still be a public record on your credit report regardless of the BK.

The DIL will typically show up in the trade line for your mortgage. It is open question whether the lender will report the DIL after a mortgage has been discharged in BK, but my sense is, they can. After all, the act that you did a DIL is true and accurate, and a lender can report true and accurate information about you on the credit report.

[NoMoreCards]

Thanks for clearing this up. I did not realize that you'd also show a foreclosure after discharge of the mortgage. I had no idea and am thankful to learn more.

So, to question (learn) more. Why is it that a auto finance company can't report the repo of a car after discharge of the debt. Meaning if someone did a ride-through, and decided a year later to return the car. They can't show a repo.

One would assume (as I did) that they had to follow the same rules.

[Mizzou13]

I'm definitely not an expert in credit bureau reporting other than my own experience. It has always been my understanding that after filing for BR and a house is subsequently foreclosed that was IIB, you will not be dinged a second time nor will it appear on your CR. The foreclosure is still a public record and would be considered in obtaining a mortgage in the future. I filed BR and included a rental home in BR that was foreclosed on. The foreclosure has never shown up on any of my CRs nor was I dinged a second time on my credit score.

[calgirl67]

After spending a few days researching my own question I found that creditors and credit reporting agencies CANNOT continue to report further actions on ANY debt after that debt has been discharged in BK. It is against the law. If an action (ie: Deed in lieu) occured before filing BK yes they can report it.

A foreclosure, is a public record and should show up on the "public record" section of your credit report but I am still unclear if that dings your actual score, like a BK listed in the public records section of your credit report does.

[HHM]

The public records section of your credit report accounts for 15% of your credit score.

https://www.myfico.com

As for your own research, care to provide some references. You are correct, the lenders cannot report continued payment history or have an inaccurate comment in the status section of the trade line. But I am not 100% confident that they could not update a subsequent event on the report after BK when it is a "secured" debt.

[shell]

Question, so if you file a chapter 7 bankruptcy and subsequently your house goes into foreclosure it will show up on your credit report but not interfer with your credit score? Is there a period of time that this takes place or over the 10 years that the bankruptcy is active.

[HHM]

Question, so if you file a chapter 7 bankruptcy and subsequently your house goes into foreclosure it will show up on your credit report but not interfer with your credit score? Is there a period of time that this takes place or over the 10 years that the bankruptcy is active.

Wrong, it will affect your credit score.

The foreclosure goes in the public records section of your credit report regardless of when you file BK. However, in general, when a foreclosure and BK happen around the same time, it is scored as a single negative event.

People incorrectly assume the credit score is linear (that is, each event has a set number of points it drops or goes up). That is not how it works, a credit score is a weighting algorithm; the point factor of any single event is affected by (weighted against) the other things on the credit report.

This is why for example, someone with a 525 credit score can have a 590 score immediately after the BK hits the credit report.

[tobee43]

calgirl i was advised the same...that after the house was surrendered in the bk...and was discharged and not reaffirmed in the bk, the foreclosure cannot be listed. (after the fact). and, that any procedures the bank choses to take after the mortgage has been discharged is their choice...but who knows...you can ask 10 attorney's and get 10 different answers nowadays!!


but really....think about it...LOL!!! u have a bankrupctcy for 10 years....what's another thing on there at this point???

i understand some banks are now refusing people mortgage or loan monies even though they did bk 15 years ago!!!!!!!!....just as an excuse to not lend.

there are lenders out that someday will need to make some money again and with all the bk's people around, they are even a safer bet since they can't file again for what is it????like 8 years of something like that???