Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is an agreement where a struggling borrower voluntarily signs the home over to the lender to avoid formal foreclosure.

What Deed in Lieu of Foreclosure means

It can be less damaging to credit than a foreclosure and may include relocation help. Lenders consider it when the borrower cannot keep the home and other options have failed. It releases the borrower from the debt in most cases.

Florida example

A homeowner who could not afford payments and could not sell agreed to a deed in lieu, handing the Orlando property to the lender and avoiding a drawn-out foreclosure on the record.

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