Deed In Lieu
Deed In Lieu’ is a common short-hand term for this situation: a borrower can’t make loan payments, and hands over their deed to the property instead, so that the lender does not have to take the home. The full phrase is ‘deed in lieu of foreclosure’ — they’re surrendering the deed so both parties can avoid the cost and impact of foreclosure. It is faster, generally less expensive for the lender, and generally less damaging to the borrower’s credit. Deed in lieu must be voluntary for both parties. The lender must agree that the deed value meets the loan amount owed – otherwise, they might have the right to seek additional payments through a deficiency judgement. Deed in lieu is typically a last resort, when losing the property has become inevitable.