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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 marketable 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 option, the Servicer needs to examine the borrower for a deed in lieu of foreclosure, a quicker and simpler procedure that enables struggling house owners to exit with dignity from their homes.

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

- Avoiding foreclosure.

- Offering up to $7,500 in relocation help for property owners who satisfy particular requirements.

- Accelerating the decision-making procedure by entrusting approval of authority to Servicers.


Borrower Eligibility

All customers are qualified for a deed-in-lieu under the following conditions:

- A borrower who does not meet the requirements for a structured deed in lieu of foreclosure should be experiencing or have experienced among the qualified hardships listed in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).

- The debtor must be able to convey clear and valuable title to the mortgaged properties to Freddie Mac.

- The customer isn't delinquent, hasn't obtained a brand-new mortgage in the 6 months preceding the borrower's delinquency or, if the customer is current in the 6 months preceding examination for a deed-in-lieu, the customer is just allowed to have gotten a brand-new mortgage if their eligible difficulty was far-off employment transfer.

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

- The Borrower is just allowed to have gotten a new Mortgage if the Borrower's qualified challenge was far-off work transfer.


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

- If the residential or commercial property is condemned and/or broker rate viewpoint (BPO) reveals that the residential or commercial property has been poorly preserved, has structural/foundation problems or needs major repair work.

- If a borrower does not satisfy eligibility requirements for a deed in lieu of foreclosure but the Servicer feels it might be the very best alternative for attending to the delinquency. The Servicer should likewise submit a total 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 documents is based upon delinquency. Borrowers who are more than 18 months overdue ought to be evaluated for a structured deed-in-lieu.

To learn more about deeds-in-lieu, refer to 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 obligations 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 comprehend standard deed-in-lieu

Guided Answer: Deed-in-Lieu

Related resources and help

Freddie Mac Standard Short Sale FAQ.


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