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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 Maryland, 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 the borrower as it may allow them to avoid the negative consequences of a foreclosure on their credit report and potentially relieve them from the obligation to pay any deficiency balance if the property's value is less than the mortgage debt. However, it's important to note that lenders are not obligated to accept a deed in lieu of foreclosure, and its acceptance may depend on various factors, including the absence of other liens on the property and the lender's assessment of the financial situation. Borrowers considering this option should consult with an attorney to understand the implications, ensure that the agreement includes a release of any deficiency balance, and to navigate the legal process properly.

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Real property

deed in lieu of foreclosure

Individual & Family Legal Plan

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Maryland State Code

Real property

deed in lieu of foreclosure

Articles