• Deed-in-lieu

    Who is it for?

    If a borrower is unable to qualify for a short sale, they may be eligible for a deed-in-lieu of foreclosure, which is an option that will allow a borrower to settle their outstanding loan obligation by transferring ownership of the mortgaged property to the lender. The property must be free of any other liens in order to be considered for this option.

    Is a deed-in-lieu right for you? Check to see if all three of the following scenarios apply to you:

    • You are no longer able to make mortgage payments or have already missed a payment due to financial hardship.
    • You have already vacated your home; or are able to have your home vacated shortly if you are approved for a deed-in-lieu.
    • You have been unsuccessful in selling your home for market value.
      • Note that the required marketing time may vary depending on the investor.

    What does a deed-in-lieu of foreclosure do?

    A deed-in-lieu of foreclosure allows a borrower to voluntarily transfer their property to us in exchange for preventing forced foreclosure. If a deed-in-lieu transaction is completed on your property, we will report that your loan was in default and resolved by acceptance of a deed-in-lieu of foreclosure.

    It is important to note that a deed-in-lieu of foreclosure may adversely affect the ability to obtain credit in the future. We strongly suggest that borrowers consult with a tax professional for advice regarding credit and tax implications.

    Deed-in-lieu Requirements:   

    Certain requirements must be met in order for a deed-in-lieu of foreclosure to take place, such as:

    • Property must be vacant and in broom-swept condition
    • Property must not have any structure or foundation defects
    • Borrower must be able to convey a clear and marketable title
    • Borrower is experiencing a financial hardship and is currently delinquent on their mortgage
    • Borrower must cover all recording fees associated with the process

    How do I apply?

    If you are interested in pursuing a deed-in-lieu of foreclosure, You may choose one of the following two options:

    1. Download our paper application to provide your information and submit the required documents by fax or mail.
    2. Contact us at 1-800-781-7399 for more information.

    Income Documentation Requirements:

    With your application, you must submit:

    • Proof of income for 2 most recent months and, if self employed, P&L statements for 3 most recent months
    • Bank statements, both checking and savings, for 2 most recent months (ALL pages, including any blank pages and the page provided for balancing the account. Online printouts are unacceptable.
    • Second lien holder monthly statement, if there is a 2nd lien
    • Your most recent signed and filed federal tax return with all the applicable pages and Schedules included.

    Benefit 

    A deed-in-lieu of foreclosure allows a borrower to transition out of their home without going through foreclosure. In some cases relocation assistance may be available.