What is a deed in lieu of foreclosure?

A deed in lieu of foreclosure is different from a foreclosure because it is done voluntarily. It is when you voluntarily transfer title to the property back to the bank/lender instead of having them foreclose which is done involuntarily.

A deed in lieu will typically occur when the mortgage payments are not being payed. The homeowner would approach the lender and ask for them to accept a “deed in lieu of” continuing to foreclose. This may be beneficial to you because it may help release you from your debt and avoid the foreclosure process which would impact your credit score more. However, you will also be losing your home and any equity you may have put into it. However, you should not sign any documents from the bank or anyone without having an attorney review it.