Definition
Deed in Lieu of Foreclosure—when a homeowner voluntarily transfers property ownership to the lender to avoid foreclosure proceedings. It's the real estate equivalent of quitting before you're fired.
Example Usage
Rather than endure a lengthy foreclosure, she negotiated a deed in lieu with the bank and walked away with less credit damage.
Origin
Developed as a foreclosure alternative during the Great Depression
Fun Fact
While less damaging than foreclosure, a deed in lieu still tanks your credit score and typically prevents you from getting another mortgage for several years.
Source: Federal Housing Administration loss mitigation guidelines
Related Terms
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See “deed in lieu” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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