Mortgage Refinance Point

When should one go for Deed in Lieu of Foreclosure?

The deed in lieu of foreclosure is a legal deed instrument which helps you to transfer your mortgage property voluntarily to the lender in exchange for the lenders canceling the loan. The deed in lieu of foreclosure will stop the foreclosure procedure or allow the lender to promise that he will not go for foreclosure. It is good and healthy deal for both the lender and the mortgagee because it gives the quick relief from most or all of the owed associated with the defaulted loan and the lender gets the house easily in good resale condition without doing any thing.

When you unable to pay off your current mortgage loan and also you are unable to sell your home at the current value, so you thing you have to fill a bankruptcy or going for foreclosure both of which are harmful to your credit rating but there is also an another way with least effect on credit rating that the deed in lieu of foreclosure which is helps the mortgagee to restart in life as he is free from all obligations under the mortgage.

Even when you need to get again any home mortgage loan you must have to choose the deed in lieu of foreclosure as because this is the thing which helps you to avoid the foreclosure for defaulting on mortgage loan. When you are listed as defaulter to the mortgage companies, they will not approve you any other new mortgage loan in future.

So as like you everybody wants to be better in credit to the loan providers, you must choose wisely the way of more safety for future credit deals because life is not end here after going for foreclosure or not after filling a bankruptcy.

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.