When a borrower defaults on its mortgage, a lender has a variety of remedies offered to it. Over the last few years, lenders in addition to customers have progressively selected to pursue options to the adversarial foreclosure process. Chief among these is the deed in lieu of foreclosure (referred to as a "deed in lieu" for short) in which the lending institution forgives all or the majority of the customer's responsibilities in return for the borrower voluntarily turning over the deed to the residential or commercial property.
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During these difficult economic times, deeds in lieu deal lenders and debtors numerous benefits over a standard foreclosure. Lenders can reduce the unpredictabilities fundamental in the foreclosure procedure, decrease the time and expenditure it requires to recover ownership, and increase the probability of receiving the residential or commercial property in better condition and in a more seamless manner together with an appropriate accounting. Borrowers can avoid costly and drawn-out foreclosure battles (which are typically not successful in the long run), handle continuing liabilities and tax implications, and put a more favorable spin on their credit and credibility. However, deeds in lieu can also position substantial threats to the celebrations if the problems attendant to the process are not thoroughly considered and the files are not appropriately prepared.

A deed in lieu need to not be considered unless a professional appraisal values the residential or commercial property at less than the remaining mortgage commitment. Otherwise, there is the threat of another creditor (or in insolvency) declaring that the transfer is a deceptive conveyance and, in any case, the customer would undoubtedly be hesitant to give up a residential or commercial property in which it may stand to recuperate some worth following a foreclosure sale. Also, a deed in lieu transaction need to not be required upon a customer