 TITLE: What Does Deed in Lieu of Foreclosure Mean? CONTENT: What Happens When You're Facing Foreclosure\n-------------------------------------------\nDeed in lieu of foreclosure is one of several options if you are a homeowner facing foreclosure. The others are:\n*   **Short sale****.** This is when the homeowner accepts an offer from the lender for less than they owe on the house.\n*   **Mortgage modification.** Any change to the original loan in cases of financial hardship is called a modification.\n*   **Chapter 13 bankruptcy filing****.** This allows homeowners to repay the loan as approved when their petition is granted.\nSimply walking away from the home or allowing the foreclosure and eviction process to run its course can leave you with ruined credit, reduced resources, and a substantial amount of debt that can increase over time from the unpaid mortgage balance. In many states, borrowers can continue to be liable for the amount of the home loan on which they default, plus substantial interest.\nA deed in lieu offers you the chance to negotiate with your lender to reduce or eliminate any outstanding mortgage balance, and even offers the potential of getting you some cash to find a new place to live.\nAlthough it doesn't feel like it when you're in a desperate financial situation, a homeowner in possession of their property still has some leverage with the lender. In many states, the foreclosure process can be lengthy and expensive for the lender, who must hire attorneys, pay for legal advertisements, or go to court to prove that the homeowner is in default and claim the property. In addition, the lender also may need to go through a separate legal process to finally evict the homeowner, even after a successful foreclosure.\nFinally, lenders worry that a distressed, angry homeowner might damage the property or strip it of valuable items, such as appliances, cabinets, fixtures and more. Offering a deed in lieu of foreclosure means the lender can get the property sooner, in good shape and at less cost. That allows the lender to resell the home as soon as possible at the best current price.\nIt's risky to pursue a deed in lieu by yourself, since it involves what can be complicated legal contracts. If you're facing foreclosure, you should talk to an approved Housing and Urban Development (HUD) housing counselor and a bankruptcy or foreclosure defense attorney to determine the best options. Even if you do pursue negotiating a deed in lieu on your own, at least have the final agreement reviewed by an attorney to protect yourself. END