Deed Of Lieu Repercussion (Hard Money)

[Account Closed]

Hey BP,

If I give my property back to my hard money lender in deed of lieu and they take the property back and rehab it, will this affect my credit score and stop me from getting a bank loan in the future? I tried to flip a home with a hard money lender before purchasing my primary residence and ran into issues with a bad contractor. My credit score is great and I don't want to ruin it.

[Jay Hinrichs]

Extremely rare that a HML reports to fico.. here is why.. they have to report ALL their loans to fico or NONE.. I went through this when I was running my shop.. Ergo its highly doubtful they report..

what they can do though is issue you a 1099C which will be ordinary income to you.. and create a mess with the IRS.

they could sue you for a judgment.

If they go the DIL route make sure you have an attorney negotiate out the fact that no deficieancy can be done and that they will not issue the 1099C against you.