Deed in Lieu of Foreclosure

[Karen Parker]

I was wondering if anyone could tell me which process is the most harmful to your credit, Deed in Lieu of Foreclosure or a short sale?

[Jon Holdman]

Fannie Mae Guidelines, June 25 2008 documents the specific guidelines. Of the three being discuessed:

Foreclosure: 5 years
Deed in Lieu: 4 years
Short Sale ("preforeclosure sale"): 2 years

Now, its certainly possible there are more recent changes that override these. But that sort of thing does tend to pop up here, and I don't recall seeing anything more recent. This does apply only to Fannie Mae.

My recent experience with a short sale makes me think banks will try for a foreclosure and deficiency judgment if they think there's something there.