As a homeowner, if you have made the decision that you either cannot afford  to make your mortgage payments or that you no longer want to keep the property, you have several options, of which a Deed in Lieu of Foreclosure is one of them.

A Deed in Lieu is similar to a voluntary repossession. You are signing over the deed or “title” to your property to the lender in exchange for the lender agreeing to cancel the mortgage. The typical Deed in Lieu of foreclosure is a consensual transaction and as such you will be required by the lender to comply with a long list of requirements.  Generally speaking, there are certain guidelines that must be followed before the lender will consider the Deed in Lieu such as : that the borrower must have suffered a hardship such as a loss of job, sickness, dissolution of marriage, etc.; that the property is the borroweer’s former homestead;and that the borrower must have exhausted other options. There cannot be any other liens on the property and the property has been on the market between 90 and 180 days.  They will then evaluate your facts and circumstances and, after great deliberation, a long time and a lot of luck, they may agree to take back the property instead of suing  you.  The process, however, is not always as clean-cut  as it may appear. The lender will typically reserve the right to seek a deficiency judgment against you in the event that the proceeds of the sale  of the property are less than the amount you owe the lender.