Legal Definitions - deed in lieu of foreclosure

Deed in lieu of foreclosure is a way for homeowners to avoid foreclosure by giving their house to the lender. Foreclosure can be a long and public process that can be embarrassing and stressful for homeowners. With deed in lieu of foreclosure, the lender agrees to take the house instead of the debt owed, which can be a quicker option for homeowners.

For example, if a homeowner is struggling to make their mortgage payments and is facing foreclosure, they may choose to offer a deed in lieu of foreclosure to their lender. The lender would then take possession of the house and the homeowner would no longer be responsible for the debt owed.

It's important to note that in some states, the homeowner may still owe any difference between the value of the house and the amount owed if the house is worth less. For example, if the homeowner owes $200,000 on their mortgage but the house is only worth $150,000, they may still owe the lender $50,000.