Deed in lieu of foreclosure

In a DEED IN LIEU OF FORECLOSURE situation, You voluntarily turn over your house to your lender. It offers several advantages to both the borrower and the lender. The principle advantage for the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower may receive more generous terms (keys for cash) to leave the property than if a formal foreclosure proceeded. Advantages to the lender include a reduction in the time and cost of repossession. 

Ask the lender to: 

1. Cancel any deficiencies and fees. 
2. Eliminate negative credit references.
3. Allow you to have extra time in the house. 
4. Pay your moving expenses. 

Complications: 

1. To be considered for deed in lieu, most servicers/investors require the property to have been listed at a fair market price for 60-90 days prior to the request. Both sides must enter into the transaction voluntarily and in good faith. Generally, the investor will not proceed with a deed in lieu if the outstanding balance of the mortgage exceeds the current fair market value of the property. DO NOT DO THIS unless you get something in writing. 
2. DO NOT LEAVE YOUR PROPERTY PENDING A DECISION BY THE SERVICER/INVESTOR OF A DEED IN LIEU. You must be living in the home to be considered for a deed in lieu. There are scammers in the community that prey on vulnerable homeowners and have convinced many to leave the home. Don‟t be one of them. There is a law requiring the deed in lieu is voluntary, and lenders often will not act upon a deed in lieu unless they receive a written offer from the borrower specifically stating that the offer to enter into negotiations is being made voluntarily. Neither the borrower nor the lender is obliged to proceed with a deed in lieu until a final agreement is reached. In the state of Michigan, if a homeowner agrees to a deed in lieu, they forfeit their six months right of redemption.