What does a “Deed in Lieu of Foreclosure” mean?

UPDATED: Aug 22, 2014

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Aug 22, 2014Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

What does a “Deed in Lieu of Foreclosure” mean?

My mother passed about 6 months ago. She had a living Trust which at the time of her death had no assets, except for her house. She had a reverse mortgage on the home. She owes $250,000 and it appraised at $131,000. She also had mortgage insurance. My brother and I have been served with foreclosure papers and they list us as “Successor Trustees”. I have been calling and trying to get everything settled for 5 months. We signed a Deed in Lieu of foreclosure last month. When I received the letter from the attorney for the bank, I called and they said the deed in lieu doesn’t stop foreclosure. We have offered to sign it over to them, we have no interest in the house. I did respond but will this tarnish my credit.

Asked on August 22, 2014 under Real Estate Law, Florida


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Well that attorney was incorrect.  A deed in Lieu of Foreclosure is a transaction where the homeowner voluntarily transfers title to the property to the lender in exchange for a release from the mortgage obligation. By doing so it stops the foreclosure process.  I would speak with a lawyer about this an possible retain him or her on a limited basis - say writing a few letters and contacting the bank - to have the matter resolved. Make sure you discuss that the deficiency is waived. That is VERY important. Your credit may or may not be involved given that the house is in the name of the trust.  It should not reach you directly but it is good to check and make sure that the bank does the right thing.  Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption