What are the pros of deed in lieu of foreclosure?

A deed in lieu of foreclosure is a good option to use if you are facing foreclosure and cannot afford to keep your house, and you are upside down on your mortgage.  Some lenders require you try and sell your home as a short sale first, and if you are not successful after 30 or 60 days, they will discuss a deed in lieu option.  If your lender agrees to this foreclosure prevention option, then all you have to do is transfer the ownership of the property to your lender by signing a deed and handing them the keys. The advantages are you get to walk away not owing any more money on your mortgage to your lender, and you save time, money and stress of having to go through a formal foreclosure process.  It’s a much quicker process than a short sale or a foreclosure.  You should negotiate that the deed satisfies the debt, and ask your lender to report the debt as satisfied or paid as agreed.  This way your credit won’t be negatively impacted, and your lender won’t be able to pursue a deficiency judgment against you later for any unpaid mortgage balance.  A foreclosure stays on your credit 7 years and has an immediate negative impact.  

You should speak with a foreclosure defense attorney who can help you negotiate the deed in lieu of foreclosure with your lender and also advise you of other foreclosure prevention options, including a mortgage modification, reinstatement, refinance, forbearance and short sale.   The attorney is an expert at foreclosure laws and foreclosure prevention, and can represent you in court.