What is a deed in lieu of foreclosure?

[krisinbe]

My mom got an email from her mortgager stating that they will try to work with her by doing a short sale or a deed in lieu of foreclosure. That's one I haven't heard of. What is it?

[Chris in OK]

I believe deed in lieu means you transfer the deed to the bank, and they give you X amount of time to be out of the house, and sometimes pay you moving expenses (instead of for losing and forcing you out). Saves them money and headaches.

[SportsNut]

Deed in lieu, (in lieu = instead of foreclosure), so the concept is that instead of foreclosing on your Mom the lender might offer her a chance to surrender the property legally to them, by signing a deed, and avoid them filing the formal process of foreclosure, which can often times result in unwanted public notices and other attention. As stated by the other poster, lenders will sometimes offer a financial incentive for you Mom to be moved out on X date, usually 1, 2 and sometimes up to 3K, often called "cash for keys". This means she would move her belongings, and have the place empty and broom swept, hand a rep the keys and they would hand her the agreed upon amount of incentive / cash.