Deed in lieu of foreclosure

A deed in lieu of foreclosure is a deed instrument in which you the mortgagor convey all interest on your property to the mortgagee (the lender). You provide this deed in order to satisfy a loan that is in default and to avoid foreclosure.

When you provide this deed, the lender will also want you to provide some kind of letter stating that you are providing this deed voluntarily. It does this to protect itself against a lawsuit claiming that you didn't know that you were turning over the property or that you were somehow forced into doing it.

This deed creates a win-win situation for both you and the lender. It's good for you, because it allows you to satisfy your debt without having to go through a public foreclosure proceeding and owing no additional money.

It's good for the lender, because it saves on all of the expenses of a foreclosure procedure and greatly reduces the amount of time required for getting the property back.

Remember, it should be your last resort because it does not save your home. Also keep in mind that the lender is not obligated to do this, so you'll have to convince them that it's in their best interest. Once you get the O.K. from the lender, I would recommend hiring a lawyer to draw this up for you.

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