What is a deed-in-lieu of foreclosure?

A deed-in-lieu of foreclosure is a process that is done to avoid a traditional foreclosure in Washington. In a traditional foreclosure, the lender will sell a property to recoup the loan amount after the owner has defaulted on their payment. A deed-in-lieu of foreclosure is a way for the owner and the lender to mutually agree to end the loan. In a deed-in-lieu of foreclosure, the owner agrees to voluntarily sign over the title to the property to the lender. This is beneficial to the lender since they are able to repossess the property while avoiding costly foreclosure proceedings. For the owner, they are able to avoid a severe hit to their credit score that accompanies a foreclosure. They are also more likely to maintain possession of any personal property that is in the home. In Washington, a deed-in-lieu of foreclosure is usually used as a last resort for both the lender and the owner. Before this process can begin, the owner must have exhausted all other options for resolving the loan, such as a loan modification or a short sale. They must also prove that they are facing a legitimate financial hardship that prevents them from making the loan payments.

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What is a deed-in-lieu of foreclosure?

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