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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 debtor's challenge is long-term and they're unable to be approved for any retention options or a short sale alternative, the Servicer ought to evaluate the customer for a deed in lieu of foreclosure, a much faster and simpler procedure that enables having a hard time house owners to leave with dignity from their homes.

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

- Avoiding foreclosure.

- Providing to $7,500 in relocation support for property owners who satisfy particular requirements.

- Accelerating the decision-making process by delegating approval of authority to Servicers.


Borrower Eligibility

All borrowers 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 actually experienced one of the eligible challenges noted in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).

- The borrower needs to have the ability to communicate clear and marketable title to the mortgaged facilities to Freddie Mac.

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

- if the Borrower is present, in the 6 months preceding the examination of the Borrower for a deed-in-lieu of foreclosure.

- The Borrower is only allowed to have actually acquired a brand-new Mortgage if the Borrower's eligible difficulty was remote work transfer.


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

- If the residential or commercial property is condemned and/or broker price viewpoint (BPO) reveals that the residential or commercial property has actually been poorly preserved, has structural/foundation problems or needs significant repairs.

- If a customer doesn't satisfy eligibility requirements for a deed in lieu of foreclosure however the Servicer feels it may be the very best alternative for addressing the delinquency. The Servicer must likewise send a total Borrower Response Package (BRP).


However, unless notified 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 on delinquency. Borrowers who are more than 18 months overdue ought to be examined for a structured deed-in-lieu.

For more information 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 extra brief sale and deed-in-lieu of foreclosure requirements once the First Complete Borrower Response Package is gotten.
Guide Section 9208.8: Closing, reporting, drafting and remittance requirements for short sales and make-whole preforeclosure sales

Factsheets and checklists

Home Affordable Foreclosure Alternatives (HAFA).

Foreclosure Sale Bidding Instructions

Helping you understand standard deed-in-lieu

Guided Answer: Deed-in-Lieu

Related resources and assist

Freddie Mac Standard Short Sale FAQ.


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