“Yes, We Will Take a Deed in Lieu but You cannot Immediately Buy Another Home”

I got a call from folks that were referred by one of their kids. She told me that she and her husband had been discharged from bankruptcy 4 years ago and deeded their current home to the servicer last month Now they wanted to get preapproved for the purchase of another home.

I told her the discharge from the bankruptcy part was fine, but they couldn’t get a mortgage until May of 2017, 36 months past the deed in lieu of foreclosure. I had mixed emotions about the entire conversation, as she was playing the system. They were in the foreclosure process for a total of 5 years and just about the time the hammer was ready to drop, they agreed to deed the property.

They were smart that they re-established credit and had credit scores in the high 600’s, but were given bad information about when they could obtain another mortgage. I guess there is some justice, they now have to wait for the system to allow them to buy a home again for 3 years.

How often I have heard folks get very bad advice about when someone can buy a home, after a bankruptcy, foreclosure, deed in lieu of foreclosure and a short sale. Many times it is because folks just don’t know.