 TITLE: What Does Deed in Lieu of Foreclosure Mean? CONTENT: Advantages of a Deed in Lieu of Foreclosure\n-------------------------------------------\nA deed in lieu arrangement offers several advantages to the homeowner:\n*   **It allows you to avoid or minimize any deficiency on your mortgage.** That's the loss the lender takes on the difference between the current, fair market value for your home and the balance of your home loan. In many states, the law allows lenders to pursue borrowers for any deficiency. In some cases, that balance continues to charge interest at the penalty rate stated in the original mortgage, which is often several percentage points higher than the stated mortgage rate. Under a deed in lieu arrangement, homeowners have the ability to negotiate the deficiency and even eliminate it. If you get this kind of deficiency waiver, make sure it's in writing and notarized, and keep copies with your long-term financial records to protect yourself.\n*   **It may give you help moving.** In a \"cash for keys\" arrangement, the lender offers money to help you with moving and finding a new place to live to ensure that the property is turned over quickly and in good condition.\n*   **It could reduce the hit to your credit.** Plummeting credit scores come with a formal foreclosure, depending on your circumstances. Although settling the mortgage for less than the full balance owed will still hurt your credit, the damage may not be quite as bad. And while a deed in lieu arrangement will hamper your ability to get another home loan for up to four years, that's better than the seven-year wait that applies to most foreclosures. END