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Deed-in-Lieu

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What is a Deed-in-Lieu?

A deed-in-lieu (" deed in lieu of foreclosure") is a borrower's voluntary conveyance of clear and valuable title of the residential or commercial property to Freddie Mac in exchange for a discharge of debt.

Getting Started

If a borrower's difficulty is permanent and they're not able to be approved for any retention choices or a brief sale choice, the Servicer needs to examine the debtor for a deed in lieu of foreclosure, a quicker and easier procedure that enables having a hard time house owners to leave with dignity from their homes.

The basic deed-in-lieu simplifies and streamlines the transaction by:

- Avoiding foreclosure.

- Offering up to $7,500 in relocation assistance for property owners who fulfill specific requirements.

- Speeding up the decision-making procedure by handing over approval of authority to Servicers.


Borrower Eligibility

All customers are eligible for a deed-in-lieu under the list below conditions:

- A borrower who does not fulfill the requirements for a streamlined deed in lieu of foreclosure must be experiencing or have experienced among the eligible challenges listed in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).

- The customer needs to be able to communicate clear and marketable title to the mortgaged facilities to Freddie Mac.

- The borrower isn't delinquent, hasn't gotten a new mortgage in the 6 months preceding the borrower's delinquency or, if the customer is present in the six months preceding examination for a deed-in-lieu, the customer is just permitted to have actually obtained a brand-new mortgage if their qualified difficulty was remote employment transfer.

- if the Borrower is present, in the six months preceding the evaluation of the Borrower for a deed-in-lieu of foreclosure.

- The Borrower is only permitted to have acquired a new Mortgage if the Borrower's eligible challenge was remote employment transfer.


Exceptions: There are some scenarios where the Servicer ought to send a deed-in-lieu recommendation to Freddie Mac:

- If the residential or commercial property is condemned and/or broker price viewpoint (BPO) shows that the residential or commercial property has actually been poorly preserved, has structural/foundation issues or requirements major repair work.

- If a customer does not fulfill eligibility requirements for a deed in lieu of foreclosure but the Servicer feels it may be the very best option for resolving the delinquency. The Servicer needs to likewise submit a complete Borrower Response Package (BRP).


However, unless alerted by Freddie Mac, all Servicers are delegated to authorize a deed in lieu of foreclosure that fulfills the eligibility requirements of Section 9209.2( a)

Borrower Documentation

Borrower documentation is based on delinquency. Borrowers who are more than 18 months overdue ought to be examined for a streamlined deed-in-lieu.

For additional information about deeds-in-lieu, describe Chapter 9209.

All Resources

Guide and policy

Guided Answer: Deed-in-Lieu.
Guide Section 9201.2: Freddie Mac loss mitigation examination hierarchy.
Guide Section 9101.4: Foreclosure suspension commitments and additional brief sale and deed-in-lieu of foreclosure requirements once the First Complete Borrower Response Package is gotten.
Guide Section 9208.8: Closing, reporting, preparing and remittance requirements for short sales and make-whole preforeclosure sales

Factsheets and lists

Home Affordable Foreclosure Alternatives (HAFA).

Foreclosure Sale Bidding Instructions

Helping you understand basic deed-in-lieu

Guided Answer: Deed-in-Lieu

Related resources and help

Freddie Mac Standard Short Sale FAQ.


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