What Is a Deed in Lieu of Foreclosure? How Does It Work?
A deed in lieu of foreclosure is a legal document that allows a homeowner to transfer the title of their property to the lender as an alternative to foreclosure. A deed in lieu of foreclosure is entered into through an agreement between the homeowner and lender, and can be beneficial for both parties involved. It allows the homeowner to avoid going through foreclosure while allowing the lender to recoup some of their losses.
The process begins when the borrower contacts their mortgage lender and informs them they are unable or unwilling to continue making payments on their loan. The borrower must then provide evidence that all other possible options have been exhausted including loan modification, forbearance agreements, or repayment plans. After both parties agree on terms, ownership of the property is transferred from the borrower back to the mortgage company with no further obligations due by either party.
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