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Understanding Deeds-in-Lieu


What You'll Learn

  • Before you can qualify for a deed-in-lieu, your lender will need to determine your eligibility for workout options to stay in your home
  • You may face tax implications with a deed-in-lieu
  • You may be eligible for relocation assistance with a deed-in-lieu

With a deed-in-lieu, your lender may accept the voluntary transfer of the title of your home back to them in exchange for cancellation of your mortgage debt. This approach may have tax implications for you, and it may not be possible if there are other liens against your home.  Be sure to discuss these implications with your lender.



The best way to get help is to reach out to your lender early!

A deed-in-lieu may make sense if you:

  • Don't qualify for any options to keep your home, including a modification, a short sale, forbearance or reinstatement. Learn more about the options to stay in your home.
  • Are behind on your mortgage payments and have received a notice of default.
  • Have recently filed for bankruptcy protection.
  • Owe more on your loan than the home is worth.
  • Have tried, unsuccessfully, to sell your home at a price that would cover your loan amount.
  • Have no other liens or encumbrances on the property (such as a second mortgage, tax lien or homeowner's association lien) or the other lien holders are willing to cooperate in the transaction.
Be aware that mortgage workout options affect your credit rating, some more than others.  Talk with your lender about how your credit may be affected.

If your loan is owned by Freddie Mac, ask your lender if you qualify for a relocation assistance payment to ease your transition to new housing.  Find out if Freddie Mac owns your mortgage.

If your mortgage is owned by Freddie Mac, reach out to your lender as soon as possible to learn more about our streamlined and simplified deed-in-lieu option.


Key Takeaways

  1. A deed-in-lieu can help you exit your home gracefully without some of the devastating impacts of foreclosure

  2. If you have any liens on your property, a deed-in-lieu may not be possible

  3. If your mortgage is owned by Freddie Mac, ask your lender about our streamlined deed-in-lieu option

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