What is a deed in lieu of foreclosure?

A deed in lieu of foreclosure is a type of agreement commonly used in California residential real estate law. When a homeowner is facing foreclosure, they might enter into a deed in lieu of foreclosure agreement with their lender. This agreement allows the homeowner to continue living in the property even while the lender takes ownership. In this agreement, the lender agrees to accept the deed to the property as repayment for the outstanding mortgage balance. This is a way for the lender to avoid the costly process of foreclosure. In exchange for the deed, the lender agrees to forgive any remaining balance due on the loan and to release the homeowner from any future financial obligations related to the loan. A deed in lieu of foreclosure is a win-win for both the lender and the homeowner. The lender gets ownership of the property and avoids the costly foreclosure process. Meanwhile, the homeowner is able to keep their property and avoid the financial stress that comes with a foreclosure.

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What is a deed in lieu of foreclosure?

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