What is a Deed-In-Lieu?

A Deed-In-Lieu is when you voluntarily transfer the ownership of the property to the owner of your mortgage in exchange for a release from your mortgage payments and loan. There are available choices, sometimes with a relocation incentive, to help you leave the home immediately; stay in the house for up to 3 months without paying rent; or lease the home (at market rates) for up to a year. Depending on your circumstances, you might have to make a financial contribution to receive a Mortgage Release.

A Deed-In-Lieu is an alternative to foreclosure and should be considered if:

• – You are unable or ineligible to modify your mortgage
• – You are dealing with a long-term hardship
• – You haven’t been able to sell your property

What are the benefits of a Deed-In-Lieu?

• – It may eliminate your remaining mortgage debt
• – You may be eligible for up to $10k relocation assistance in some instances
• – Its flexible exit options let qualified homeowners or their tenants leave the home right away, or consider other ways to transition out

How does a Deed-In-Lieu work?

In order to be eligible for a Deed-In-Lieu, you’ll work with your mortgage company to:

• – Go through and complete the eligibility process, such as determining the value of the property and how much you still owe as well as examining your current hardship
• – Review the available choices under Mortgage Release (your mortgage company will help you choose the best choice for your set of circumstances)

A mortgage release often takes about 90 days to complete, but it could be longer or shorter depending upon your personal situation. Your next steps depend on which option you are eligible for. These include vacating the home immediately, staying in the home for up to 3 months (free of rent), or leasing the home (paying market-based rent monthly) for up to a year. In addition, when you vacate the house at the agreed-upon date, you are required to leave the home, both inside and outside, in good condition, free of interior and exterior debris, trash or damage. All personal belongings must be removed as well. In some instances, you might be qualified to receive up to $3,000 relocation assistance to go toward your moving expenses and to make the transition to a new house easier.

Next steps

Step 1

Collect your financial information; be sure to have all your basic financial and loan information on hand when you call your mortgage company. You will need to have:

• – Your mortgage statements, as well as any information on a second mortgage, if you have one;
• – Your other monthly debt payments (ex. credit card payments, car or student loans);
• – Your income details (income tax returns and paystubs).

Step 2

Explain your current situation. Be prepared to describe your current hardship and explain why you are having trouble bringing your loan up to date, and whether this is a short-term or long-term issue. Your mortgage company will need to have a clear understanding of the reasons why you are having difficulty in order to find the right solution for you.

Step 3

Contact a mortgage company and tell them that you are interested in a Mortgage Release and you want to see if you are eligible.