Deed In Lieu Of Foreclosure
A potential option taken by a mortgagor (a borrower) to avoid foreclosure under which the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith. Investopedia Says:
A deed in lieu of foreclosure has advantages for both a borrower and a lender; mainly the avoidance of time consuming and costly foreclosure proceedings. In addition, the borrower avoids some public notoriety, and may even be able to lease the property back from the lender.
The lender needs to assess certain risks which include, among other things, the risk that the property is not worth more than the remaining balance on the mortgage and that junior creditors might hold liens on the property. Related Terms:
Deed
Delinquent Mortgage
Foreclosure
Good Faith Money
Judicial Foreclosure
Mortgage Forbearance Agreement
Serious Delinquency
Short Refinance
Trust Deed
Workout Assumption |