by Thomas D. Richards, Lawyer Referral Service Panelist
A Deed in Lieu is when you decide NOT to keep the house and the lender has agreed to accept it back from you as full payment on the loan. You normally need to have listed the house for sale with a Realtor for at least 90 days in order to qualify for this option, and you will still need to fill out financial statements indicating your hardship that you can no longer afford the home. The home will need to be appraised and have no other liens, judgments or mortgages on the title, including tax liens. This option will get you out of your loan and you will not likely have any deficiency balance to pay. The lender will consider the loan paid off, but will likely also report it to the Credit Bureau. This will be a negative notation on your credit report and could affect your ability to get another mortgage for a period of time.