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Deed-in-Lieu Option

If you can no longer afford your home and other alternatives to keep your home have not been successful, you may feel like you have reached a dead end and foreclosure is unavoidable. But you may qualify for a Deed-In-Lieu, which would help you resolve your delinquency and avoid foreclosure.

Overview
Benefits
How Does it Work?
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Videos

What is a Deed-in-Lieu?

A Deed-in-Lieu of Foreclosure (DIL) is where you, the homeowner, voluntarily transfer the ownership of your property (the title and all property associated with it) to the owner of your mortgage in exchange for a release from your mortgage loan and payments.

A DIL is an alternative to foreclosure and should be considered if:

You are ineligible to refinance or modify your mortgage
You are facing a long-term hardship
You are behind on your mortgage payments
You owe more on your home than it’s worth
You don’t want to sell your home or haven’t been able to sell your home
You can no longer afford your home and you are ready to leave

A lease option may be available—Deed-for-Lease
You may be able to lease your home after completing a DIL if your mortgage is owned by Fannie Mae. To see if your loan is owned by Fannie Mae, click here.

Important! If your loan is not owned by Fannie Mae, there may be a similar leasing option offered by your mortgage company. Always contact them to see what is available.

What are the benefits of a Deed-in-Lieu?

Eliminate or reduce your remaining mortgage debt
Avoid the negative impact of a foreclosure
May be eligible for relocation assistance in some cases
Start repairing your credit sooner than if you went through a foreclosure
May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
If your loan is owned by Fannie Mae (click here to check), you may qualify to lease your home through the Deed-for-Lease Option

What is the process for a Deed-in-Lieu?

To qualify for a DIL, you will work with your mortgage company to complete the eligibility process, such as determining the value of the property and how much you still owe as well as reviewing your current hardship. If approved, you will need to vacate the property (unless we agree to lease the property back to you), and you may be required to sign standard pre-closing documents as well as attend the closing.

Additionally, you will need to leave the home—both inside and outside—in good condition, free of interior and exterior trash, debris or damage, and all personal belongings must be removed. In some cases, you may be eligible to receive relocation assistance to use toward your moving expenses and to make the transition to new housing easier.

A DIL usually takes around 90 days to complete, but this could be shorter or longer or depending upon your specific situation.

Next steps

	Gather your financial information—Make sure you have your basic financial and loan information on hand when you call your mortgage company. You’ll need: your mortgage statements, including information on a second mortgage (if applicable) your other monthly debt payments (e.g., car or student loans, credit card payments), and your income details (paystubs and income tax returns).

	Explain your current situation—Be ready to outline your current hardship and explain why you are having trouble making your mortgage payment, why this is a long-term problem and confirm that you are ready to leave your home to avoid foreclosure. Your mortgage company will need to understand the reasons why you are having difficulty in order to find the right solution for you.

	Contact your mortgage company—Tell them you are interested in a DIL and you want to see if you qualify.

Your mortgage company wants to help you avoid foreclosure and, in most cases, will be willing to work with you. The biggest mistake you can make is to wait any longer to take action. Contact your mortgage company today to determine if you are eligible for a Deed-In-Lieu. If you need further assistance (before or after contacting your mortgage company), contact a Housing Counselor.

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The videos on this site depict real homeowners talking about their personal experiences in getting help with their mortgage, or show real housing counselors providing homeowners with mortgage assistance. Many homeowners have achieved similar results but individual results vary depending on multiple factors such as property value, income, credit, work situation, etc. The information in the videos is not an endorsement by Fannie Mae of third party service providers.