When do you use a deed in lieu of foreclosure?

A deed in lieu of foreclosure transfers the title of a house from the homeowner to the bank collecting on the mortgage. This is done when the homeowner defaults on the home loan and wants to avoid foreclosure.

Deeds in lieu of foreclosure may not always be accepted by banks instead of foreclosure proceedings and will still affect the home owner's credit score. The bank determines if such a deed is financially profitable. The agreement must be entered into voluntarily by both parties and immediately settles the debt owed to the bank while expediting the process of repossessing the home.