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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 debtor's voluntary conveyance of clear and valuable title of the residential or commercial property to Freddie Mac in exchange for a discharge of financial obligation.

Starting

If a customer's challenge is permanent and they're not able to be authorized for any retention options or a short sale choice, the Servicer must evaluate the debtor for a deed in lieu of foreclosure, a quicker and simpler procedure that allows having a hard time house owners to leave gracefully from their homes.

The standard deed-in-lieu streamlines and simplifies the transaction by:

- Avoiding foreclosure.

- Offering up to $7,500 in moving support for house owners who fulfill specific requirements.

- Speeding up the decision-making process by handing over approval of authority to Servicers.


Borrower Eligibility

All debtors are eligible for a deed-in-lieu under the list below conditions:

- A customer who does not satisfy the requirements for a structured deed in lieu of foreclosure need to be experiencing or have experienced among the eligible hardships noted in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).

- The debtor should have the ability to communicate 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 borrower is present in the 6 months preceding assessment for a deed-in-lieu, the borrower is just permitted to have actually obtained a brand-new mortgage if their eligible challenge was far-off employment transfer.

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

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


Exceptions: There are some situations where the Servicer need to submit a deed-in-lieu suggestion to Freddie Mac:

- If the residential or commercial property is condemned and/or broker cost viewpoint (BPO) reveals that the residential or commercial property has been badly kept, has structural/foundation problems or requirements significant repairs.

- If a debtor doesn't fulfill eligibility requirements for a deed in lieu of foreclosure however the Servicer feels it might be the very best option for resolving the delinquency. The Servicer ought to likewise send a complete Borrower Response Package (BRP).


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

Borrower Documentation

Borrower documentation is based upon delinquency. Borrowers who are more than 18 months delinquent need to be examined for a streamlined deed-in-lieu.

For more details 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 evaluation hierarchy.
Guide Section 9101.4: Foreclosure suspension obligations and additional short 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 brief 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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