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Real property

deed in lieu of foreclosure

A deed in lieu of foreclosure—often referred to as a deed in lieu—is a deed by which a borrower (mortgagor) transfers fee simple title to a lender (mortgagee) to satisfy a mortgage debt.

A deed in lieu of foreclosure is a substitute for the foreclosure process and a delinquent debtor or mortgagor may avoid paying a deficiency balance (if the home is worth less than the amount owed) and may lessen the impact on their credit report by signing a deed in lieu.

In Massachusetts, a deed in lieu of foreclosure is a legal instrument where a borrower voluntarily transfers the ownership of their property to the lender to satisfy the outstanding mortgage debt and avoid the foreclosure process. This option can be beneficial for both parties: the borrower can avoid the negative consequences of a foreclosure on their credit history and may be released from the obligation to pay any deficiency balance if the property's value is less than the mortgage debt. For the lender, it can be a faster and less costly way to recover the debt compared to going through the foreclosure process. However, it's important to note that lenders are not obligated to accept a deed in lieu of foreclosure, and tax implications may arise for the borrower if the lender forgives any debt. Borrowers considering this option should consult with an attorney to understand the specific legal and financial consequences.

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Real property

deed in lieu of foreclosure

Individual & Family Legal Plan

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Massachusetts State Code

Real property

deed in lieu of foreclosure

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