Mortgage Refinance Point

What is deed in lieu of foreclosure?

Deed in lieu of foreclosure is a deed instrument in which the owner of the real property voluntarily transfers the real property to the lender to avoid foreclosure and gratify the defaulted loan. If both the lender and the borrower must enter into the transaction voluntarily the deed helps the lender to get all the interest in the real property which is transfer by the borrower. If the lender does not want to go for foreclosure proceedings or the lender like to stop any running foreclosure proceedings, then the deed in lieu of foreclosure use as an alternative to foreclosure.


The several advantages of deed in lieu of foreclosure are discussed bellow.

• The borrower releases from his most of all personal liabilities associated with the defaulted loan

• Foreclosure proceedings will affect on the borrower’s credit score more than a deed in lieu of foreclosure dose.

• The borrower may avoid being infamy to the public for foreclosure proceedings.

• The borrower may like to avoid the harassment of Foreclosure proceedings.

• The borrower has the opportunity to files for bankruptcy.

How the lenders accept the deed in lieu of foreclosure?

As per borrower condition the foreclosure proceedings is unavoidable. The borrower must offer the deed in lieu of foreclosure voluntarily. The borrower is unable to sale his real property. The borrower has no other loans on that mortgage home. This is all four conditions to be met to accept the deed in lieu of foreclosure by the lender. Some times lenders are compromised to do accept the deed in lieu of foreclosure. But they may not accept the deed in lieu of foreclosure and may prefer for Short sale.
So the Deed in lieu of foreclosure or the Short sale is the last alternative to foreclosure.