Page Header

Homeowners

Home | Homeowners  | Delinquency Prevention  | Deed in Lieu of Foreclosure 

Deed-in-Lieu or Mortgage Release


Provides you the option to voluntarily transfer ownership of your home to your mortgage servicer

What you need to know 

With an FHA, USDA, or VA deed in lieu of foreclosure or FNMA mortgage release, you have the option to voluntarily transfer ownership of your home. This may work for you if you cannot or prefer not to sell your home. A deed in lieu of foreclosure releases you from the obligation to repay your primary mortgage and helps you avoid a foreclosure sale, even if the foreclosure process has already begun.

How you could benefit

As the homeowner, you may be able to:

  • Avoid a foreclosure sale
  • Be released from your liability for the remaining balance on your primary mortgage
Important considerations in a deed in lieu of foreclosure
  • In some cases, you may be required to attempt a short sale of your home before proceeding with a deed in lieu of foreclosure
  • In some cases you may be required to pay a deficiency balance at or after closing. This is the dollar difference between the mortgage amount due and the sale proceeds when ServiSolutions sell a property for less than the amount still owed on the first mortgage. If this happens, you will be informed before you commit to transferring the title to your property to ServiSolutions.
  • If you have any home equity loans, lines or second lines on your property, they will be considered separately from your first mortgage transaction. This may make it more complicated and sometimes unworkable.
  • A deed in lieu of foreclosure may have tax implications. Be sure to consult your tax advisor to see if the deficiency balance needs to be considered as income on your tax return.
  • Be sure to speak with your legal advisor about all possible implications of a deed in lieu of foreclosure, including the potential impact to your credit score
  • A deed in lieu of foreclosure may be more complicated, and sometimes unworkable, if you have a home equity loan or other liens against your property
How your credit may be affected
  • A deed in lieu of foreclosure may have a less negative impact on your credit score than a foreclosure if you are cooperatively ending the foreclosure process early and reducing the number of missed payments
  • A deed in lieu of foreclosure is reported as a “deed received in lieu of foreclosure on a defaulted mortgage”
Fast facts 
  • Transfers ownership of your home to your mortgage servicer
  • May release your obligation to repay the mortgage balance
  • Gives you an active role in the process
  • May reduce negative credit impact in the future
  • Helps you avoid a foreclosure sale and move forward sooner

Deed in lieu of foreclosure process steps

Timing may vary depending on your insurer's requirements, but the process is typically about 60 days.

  • If your mortgage qualifies, you must agree to vacate your property by a certain date and leave your home in broom-swept, livable condition – emptied of all belongings then swept clean
  • You must agree to transfer ownership of your home to ServiSolutions
  • A closing will be scheduled for the signing of the deed in lieu of foreclosure transfer documents
  • ServiSolutions processes the payoff and records all necessary documents
  • Notes:
    • Certain incentives may apply
    • You may be released from the deficiency balance