A deed in lieu of foreclosure is when the borrower hands the deed of the property over to the mortgage company in an effort to avoid foreclosure proceedings. Foreclosures can wreck havok on a borrower’s credit report and can make it almost impossible to get another mortgage in the short term. However a deed-in-leiu of foreclosure can help a borrower circumvent a damaging foreclosure proceeding. This strategy is typically used by a homeowner when their house is underwater, meaning they owe more on the home than it is actually worth. Once agreed upon and the deed is received, the lender releases the lien on the property and the borrower walks away owing nothing further. However, you need to remember that the lender is under no obligation to accept a deed-in-lieu of foreclosure. It is completely at their discretion. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe!
