How to prevent foreclosure - Deed property to lender (Deed in-lieu of foreclosure [DIL])

As a last ditch effort by the borrower to avoid the negative consequences of foreclosure, borrowers can voluntarily sign-over title of the property to the lender, resulting in a total loss of their equity. 

In difficult cases, this may appears to be the best option for many homeowners.  However, homeowners need to pursue their other options beforehand, as deed-in-lieu of foreclosure is probably not the best option for them.

Most lenders will not accept a deed-in-lieu of foreclosure if there are additional mortgages or junior liens on the property.  This option may not save the homeowner’s credit.  As a result, it may be preferable to sell the property to an investor outright or as a short sale to prevent foreclosure rather than taking this route.