What is a deed lieu of foreclosure agreement?

If you are behind on your mortgage payments, you may wonder if you have any options to improve your financial situation. Defaulting on your mortgage may lead to a foreclosure, forcing you to leave your home and adding negative information to your credit history. While you may be able to avoid foreclosure through mortgage modification or bankruptcy, sometimes those options are not possible. Another thing you may want to consider is a deed in lieu of foreclosure agreement. This option is legal in Georgia, but you must get your lender to approve it.

According to Georgia's Office of Attorney General, a deed in lieu of foreclosure agreement (also called voluntary conveyance) basically involves you returning the deed to the property to your lender. If you cannot afford to make your mortgage payments any longer, you may ask your lender to agree to this exchange. You would transfer ownership back to the lender and your loan would end. Choosing this option may not allow you to stay in your home, but it may limit the negative impact to your credit history. If you have a loan through Fannie Mae, you may have the option to lease your home after signing over the deed. Some other lenders may offer a similar arrangement.

The details of a deed in lieu agreement may vary depending on your equity situation. If your home has a market value similar to the amount of your loan, the agreement may be fairly simple. However, if you owe more than your home is worth, your lender may refuse a deed in lieu agreement or require you to pay the difference. If you have positive equity, your lender may agree to compensate you somehow. A deed in lieu of foreclosure may provide benefits to you and your lender.

This information on a deed in lieu of foreclosure agreement is provided for educational purposes and should not be interpreted as legal advice.

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