When a customer defaults on its mortgage, a lender has a variety of remedies offered to it. Recently, lenders as well as debtors have significantly chosen to pursue alternatives to the adversarial foreclosure procedure. Chief among these is the deed in lieu of foreclosure (referred to as a "deed in lieu" for brief) in which the loan provider forgives all or many of the debtor's obligations in return for the borrower voluntarily turning over the deed to the residential or commercial property.

During these hard financial times, deeds in lieu offer lenders and borrowers numerous over a standard foreclosure. Lenders can diminish the uncertainties inherent in the foreclosure procedure, decrease the time and cost it takes to recover ownership, and increase the probability of getting the residential or commercial property in much better condition and in a more seamless way together with a proper accounting. Borrowers can avoid costly and drawn-out foreclosure fights (which are generally unsuccessful in the long run), manage continuing liabilities and tax implications, and put a more favorable spin on their credit and track record. Even so, deeds in lieu can likewise present substantial threats to the celebrations if the problems attendant to the procedure are not thoroughly considered and the documents are not effectively prepared.

A deed in lieu ought to not be thought about unless a professional appraisal values the residential or commercial property at less than the staying mortgage commitment. Otherwise, there is the risk of another financial institution (or trustee in insolvency) declaring that the transfer is a deceptive conveyance and, in any case, the debtor would clearly hesitate to relinquish a residential or commercial property in which it might stand to recover some worth following a foreclosure sale. Also, a deed in lieu transaction must not be forced upon a debtor