Deed in lieu of foreclosure

If you’re going through the foreclosure process, one potential solution is to pursue a ‘deed in lieu of foreclosure.’ A deed in lieu of foreclosure is a deed instrument in which the borrower conveys all the interest in a mortgage to the lender. That means the borrower essentially gives the home to the bank and walks away.

Why would a borrower want to do this? First, you avoid the legal ramifications of going through foreclosure. Secondly, it releases the borrower from all responsibility. The advantage to the bank is that this is far faster than a foreclosure, repossession, and an ugly battle that will likely ensue.

Generally, banks won’t do this unless the debt is less than the fair market value of the house, which is not a common scenario these days, but it is far easier on both parties than a foreclosure.