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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 borrower's voluntary conveyance of clear and marketable title of the residential or commercial property to Freddie Mac in exchange for a discharge of financial obligation.
Getting going
If a customer's hardship is permanent and they're not able to be authorized for any retention choices or a brief sale choice, the Servicer ought to review the debtor for a deed in lieu of foreclosure, a much faster and easier process that allows struggling homeowners to exit with dignity from their homes.
The standard deed-in-lieu streamlines and improves the deal by:
- Avoiding foreclosure.
- Offering up to $7,500 in moving assistance for house owners who fulfill particular requirements.
- Speeding up the decision-making procedure by entrusting approval of authority to Servicers.
Borrower Eligibility
All customers are qualified for a deed-in-lieu under the list below conditions:
- A borrower who does not meet the requirements for a streamlined deed in lieu of foreclosure must be experiencing or have experienced among the eligible challenges noted in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).
- The borrower should have the ability to convey clear and valuable title to the mortgaged premises to Freddie Mac.
- The customer isn't overdue, hasn't obtained a new mortgage in the 6 months preceding the debtor's delinquency or, if the debtor is current in the 6 months preceding examination for a deed-in-lieu, the customer is just permitted to have acquired a new mortgage if their eligible difficulty was distant work transfer.
- if the Borrower is existing, in the six months preceding the assessment of the Borrower for a deed-in-lieu of foreclosure.
- The Borrower is only permitted to have actually obtained a new Mortgage if the Borrower's eligible hardship was distant work transfer.
Exceptions: There are some circumstances where the Servicer should send a deed-in-lieu recommendation to Freddie Mac:
- If the residential or commercial property is condemned and/or broker rate viewpoint (BPO) shows that the residential or commercial property has actually been poorly preserved, has structural/foundation problems or requirements major repairs.
- If a borrower does not satisfy eligibility requirements for a deed in lieu of foreclosure however the Servicer feels it might be the best alternative for attending to the delinquency. The Servicer must also send a complete Borrower Response Package (BRP).
However, unless alerted by Freddie Mac, all Servicers are delegated to approve a deed in lieu of foreclosure that satisfies 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 streamlined deed-in-lieu.
To find out more about deeds-in-lieu, refer to Chapter 9209.
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Guide and policy
Guided Answer: Deed-in-Lieu.
Guide Section 9201.2: Freddie Mac loss mitigation examination hierarchy.
Guide Section 9101.4: Foreclosure suspension obligations and extra short sale and deed-in-lieu of foreclosure requirements once the First Complete Borrower Response Package is received.
Guide Section 9208.8: Closing, reporting, drafting and remittance requirements for short sales and make-whole preforeclosure sales
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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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