The lender may accept a deed in lieu of foreclosure, taking the property back from you without going through the foreclosure process. We will negotiate with the lender on your behalf and work to ensure that any agreement provides the maximum level of benefit for you.

Deed In Lieu Of Foreclosure

The primary disadvantage to the borrower is the loss of the property, the income from the property, and the borrower's investment in the property. The conveyance of the property is also taxable. Offer to Deed. A borrower's offer to convey mortgaged property back to the lender must be truly voluntary.

Reasons A Lender Might Accept A Deed In Lieu

Though a lender isn’t obligated to accept your deed in lieu of foreclosure, they have a few incentives to do so. Some of the benefits your lender gets when they take a deed in lieu include:

Faster control over your property: Lenders must pay attorneys to go to court, prove that you haven’t been paying your bills and get approval from the court to take your property in foreclosure. The lender must also legally evict you from the property, even after they’ve already gone to court. Your lender saves both time and money by taking a deed in lieu.
Better property conditions: Lenders may agree to take control of properties that are in good condition because these properties sell for more money and spend less time on the market. A lender will sometimes stipulate that you must keep the property in good condition with a deed in lieu.

Foreclosures show up on your credit report, which can make it virtually impossible for you to buy another home for years. A deed in lieu of foreclosure can release you from your mortgage responsibilities and allow you to avoid a foreclosure on your credit report.

When you hand over the deed, the lender releases their lien on the property. This allows the lender to recoup some of the losses without forcing you into foreclosure. When you turn over your deed, the lender also releases you from anything else you owe on the mortgage. Many homeowners seek deed in lieu agreements when their mortgage ends up underwater, meaning they owe more on their home than the home is worth.