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Does a Deed in Lieu Prevent a Security Clearance?

Posted by Valerie Pressley on October 31, 2012 at 10:14am in Short Sale Discussions

I've got a military client and I've been working on a short sale with him.  Bank of America won't budge on the price and a new attorney who just started negotiating the short sale suggested a deed in lieu.  She has no idea whether or not a deed in lieu will hurt the client's chances of getting his security clearance.  Does anyone know if the seller can do that and still get a security clearance?

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Replies

  • Eartha Wang November 12, 2012 at 5:15am

    In most cases a Deed in Lieu is recorded as a foreclosure.  A foreclosure can negatively effect a persons ability to get or keep a security clearance.  I personally know of a alarm company employee that lost his security clearance because he let his house go to foreclosure.  After he lost his clearance, he was terminated from his job. 

    I do have a suggestion, make sure BoA knows this is an active duty military.  We had several short sales get approved very quickly once the lender understood it was active duty military.

    Also, is this an FHA loan?  There are some steps you can take to get the net changed if it is FHA.

  • Kathy Bennett November 12, 2012 at 1:29am

    It is my understanding both may affect his security clearance. He needs to go to supervisor immediately for legal advice through the military and not a private attorney.

  • Sonia Rosado November 11, 2012 at 10:00pm
    I was just in a CDPE class and this was part of the education. YES, a DIL will affect your security Clarence. Do what Sharon Molnar suggest. Good luck
  • Paddy Deighan, Esq November 11, 2012 at 9:33am

     A DIL can affect security clearance but it does not do so automatically. There are many factors: what branch of the government, what level of clearance etc.?? A short sale can affect clearance too. The best thing for the home owner to do is to tactfully ask around from colleagues

  • Sharon Molnar November 11, 2012 at 8:11am

    It absolutely can. Why in the world would anyone want to do a DIL when you can do a short sale. If this is a VA loan your seller can call VA's Home Loan Guaranty Program to intercede with the servicer. The number is 877-827-3702.  If that doesn't work have him contact USACares.org and have him open a claim. This if for Military personnel only.

    But, you left much of the story out.

  • Loren Hoboy November 11, 2012 at 5:54am
    This question needs to be run up the chain of command. All security clearances are not the same and each have different requirements. The Seller needs to ask the command.

    Regards,
    Loren Hoboy-Realtor
    Your Local Expert
    Central AZ Real Estate
    LHoboy@centralAZhomes.com
    623-688-0004
    • Jeff Payne > Loren Hoboy November 12, 2012 at 3:12am

      This is the best answer for this question.  Period!  A security clearance may or may not be affected depending on the situation.  A large portion of my business is military business and I know from first hand experience that some are affected and others are not affected.  The proactive seller is the seller that informs their superior immediately.  

  • Debora Nichols November 11, 2012 at 4:35am
    If you are not using Equator I can only assume that this is an FHA loan. In that case you probably have to call in for updates. Every time you call they should ask the question in the borrower or their spouse active military in the last 12 months. If they are not asking then you should bring it up. My clients are not military so I don't know what they will do different. But I think it is worth asking.

    I also agree he needs to speak with his CO and military counsel.
    • Marcy Spieker > Debora Nichols November 11, 2012 at 4:52am

      From my knowledge a security clearance is most definately affected by credit.  A DIL is much worse on credit than a short sale, escpecially if they can do a HAFA short sale as that gets reported differently. 

      We just had B of A counter a $199,000 offer with $280,000.  There is  no way the house is worth $280,000.  B of A wouldn't budge. 

      The seller must determine for himself what to do, but I'd put the house back on the market and wait for a new new offer and a new negotiator.  Protect yourself and advise in writing that he needs to contact his superior regarding this.

  • Tiffany Jones November 11, 2012 at 3:56am

    I agree with John, I have never had an issue of value wit BAC. They are very easy to work with and you can argue a bad bpo which many agents are unaware of. I find BAC is the only one nowadays that makes it easy to state your case. I have always heard that DIL and foreclosure can absoulely affect security clearances for many companies including the military. Keep working with BAC.

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