Homeowners who are faced with inevitable foreclosure have attempted to turn to alternative programs, like the deed in lieu of foreclosure plan, which may allow homeowners to surrender the deed to their home and avoid a formal foreclosure. It’s hoped, despite the fact that a homeowner has lost their home, these foreclosure alternative efforts will allow homeowners to get back on their feet in a timely manner since their credit score may take less of a hit from a foreclosure alternative plan.
While there are some homeowners who have seen their credit score drop as a result of the loss of their home, even when they participated in a foreclosure alternative plan, some feel that lenders will see a foreclosure alternative, like a deed in lieu of foreclosure plan, in a more favorable light if a homeowner seeks to reenter the housing market in the future.
Obviously, homeowners who walk away from their mortgage and strategically default are less likely to be viewed in a favorable light by lenders, and it could cause more damage to their credit score than, for instance, surrendering a deed to their home when foreclosure prevention is not available.
It goes without saying that homeowners would rather avoid the loss of their home than participate in a foreclosure alternative plan, but for those who participate in a deed in lieu of foreclosure program, it could provide incentives, like assistance with moving costs, in a case where a homeowner who is losing their home will have to meet moving expenses and relocation costs.
While a foreclosure alternative program, like those offered from the Home Affordable Foreclosure Alternatives plan, may not be a homeowner’s first choice, there have been homeowners who, when they saw foreclosure was inevitable, were able to begin seeking alternative living arrangements, surrender the deed to their home, and make the transition out of their home easier. A foreclosure alternative plan does involves working with a homeowner’s mortgage servicer, but many of the nation’s top financial institutions offer these plans which could help homeowners who have simply had a difficult time in their financial life.