What is deed in lieu of foreclosure in Michigan?

A deed in lieu of foreclosure Michigan means that you are giving your home back to the lender. According to Nolo, a deed in lieu of foreclosure is one alternative to losing your home in a foreclosure. Foreclosure is the legal process the lender has to take the house back and sell it to someone else. Typically, a homeowner will decide to give the home back to the lender when they can’t keep up with the mortgage payments. In other words, maybe they have missed too many mortgage payments or owe more than what the house is worth and don’t want a foreclosure on their credit history. Therefore, in exchange for the house, your lender agrees to cancel the loan. If the foreclosure process has already started, then the lender will promise to withdraw the complaint.

There are potential disadvantages to a deed in lieu of foreclosure. For example, a lender may not agree to take the property back. If this occurs, then you may have to prepare a quitclaim deed to transfer the property rights back to the lender. Another disadvantage is if you don’t get the lender’s promise in writing to forgive the deficiency. The deficiency is amount of money left after the lender sells your home. If you don’t get the promise in writing, you may owe the deficiency amount.

A deed in lieu of foreclosure is very complicated. Thus, before making any decision, you should contact a real estate lawyer to fully understand the process.