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 Oregon, a deed in lieu of foreclosure is a legal instrument where a homeowner 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 may avoid the negative consequences of a foreclosure on their credit history and potentially be relieved 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 quicker and less costly resolution compared to foreclosure. However, it's important to note that lenders are not obligated to accept a deed in lieu of foreclosure, and it may have tax implications for the borrower. Additionally, Oregon law may provide certain protections and requirements that must be followed in the process, such as providing the borrower with a notice of their rights and the potential for a deficiency judgment. Borrowers considering this option should consult with an attorney to understand the specific legal and financial implications.