What is a Deed-in-Lieu of Foreclosure?


April 2, 2020

Often times, a resolution can be worked out between a lender and the borrower to avoid personal liability for the mortgage. This resolution is called a Deed-in-lieu of foreclosure.

A Deed-in-lieu or “DIL” is an agreement where the borrower transfers title of the property to the lender in order to satisfy the mortgage balance owed. When a DIL is agreed to, there are a few other aspects of the agreement that may or may not be included, such as a deficiency waiver and/or cash for keys.

A waiver of deficiency means that your lender agrees to take the property as full satisfaction of the mortgage. Most often, the property will be sold at a foreclosure auction. If the sale proceeds do not satisfy the amount of the mortgage owed, your lender generally has the right to collect the deficient balance from you. However, by including a waiver of deficiency, your lender no longer has the right to collect any further contribution from you.

In some situations, the lender may seek some sort of contribution from the borrower toward the deficient balance, as opposed to a full waiver.

Deed-in-lieu agreements may also be accompanied by a “cash for keys” incentive to further appeal to the borrower. Cash for keys arrangements requires the lender to provide an agreed-upon amount of money to the borrower. The funds are often used for moving expenses to assist the borrower in relocating.

To explore your options for a deed-in-lieu of foreclosure, contact Attorney Debt Fighters for expert guidance.

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