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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 customer'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 irreversible and they're unable to be approved for any retention options or a brief sale choice, the Servicer must review the debtor for a deed in lieu of foreclosure, a much faster and simpler procedure that enables having a hard time house owners to exit with dignity from their homes.

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

- Avoiding foreclosure.

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

- Accelerating 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 following conditions:

- A debtor who does not satisfy the requirements for a streamlined deed in lieu of foreclosure should be experiencing or have experienced one of the eligible hardships noted in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).

- The debtor must have the ability to convey clear and marketable title to the mortgaged properties to Freddie Mac.

- The customer isn't overdue, hasn't acquired a brand-new mortgage in the 6 months preceding the borrower's delinquency or, if the customer is existing in the 6 months preceding evaluation for a deed-in-lieu, the debtor is just allowed to have gotten a new mortgage if their eligible challenge was remote work transfer.

- if the Borrower is current, in the 6 months preceding the examination of the Borrower for a deed-in-lieu of foreclosure.

- The Borrower is just permitted to have actually acquired a new Mortgage if the Borrower's eligible hardship was distant employment transfer.


Exceptions: There are some scenarios where the Servicer need to submit 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 inadequately kept, has structural/foundation issues or needs significant repair work.

- If a borrower does not meet eligibility requirements for a deed in lieu of foreclosure however the Servicer feels it might be the very best option for addressing the delinquency. The Servicer must also send a complete Borrower Response Package (BRP).


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

Borrower Documentation

Borrower documentation is based upon delinquency. Borrowers who are more than 18 months delinquent should be assessed for a structured deed-in-lieu.

For more 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 received.
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 comprehend basic deed-in-lieu

Guided Answer: Deed-in-Lieu

Related resources and assist

Freddie Mac Standard Short Sale FAQ.


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