A deed in lieu of foreclosure is when a borrower transfers a property to the lender. In exchange, the lender does not pursue a foreclosure. In many cases, the lender will accept a deed in lieu as a settlement of the total amount due. A popular term for this is “cash for keys.”
A deed in lieu is typically employed when a borrower (or mortgagee) can no longer afford to keep the property, and cannot find a buyer. The property should be vacant at the time, and the lender (or mortgage company) will have to approve the deed in lieu prior to the borrower relinquishing ownership rights.
