Mortgage Relief: Deed in Lieu of Foreclosure
Deed in Lieu of Foreclosure
With a deed in lieu of foreclosure, you voluntarily transfer title to the property to the lender in exchange for forgiveness of your mortgage debt and all associated costs, such as late fees, legal charges, and past-due interest payments. In many states, the lender has the right to collect these expenses after the foreclosure. Collection can drag out the uncertainty and delay a fresh start - a deed in lieu of foreclosure helps you resolve this uncertainty. You must move out of the property, but PennyMac will help you with relocation expenses (see below).
- You no longer owe the large debt to the mortgage company. We forgive any unpaid balance on your loan.
- PennyMac will give you cash to cover expenses in relocating to a new home upon completion of the process.
- You avoid having a foreclosure on your credit report.
- You avoid the costs and stress of public foreclosure.
- You have the ability to work out a mutually convenient move out date.
- You can still have your home listed for sale while the deed in lieu of foreclosure process moves forward. You then have multiple options to prevent the foreclosure sale of your property.
The Deed in Lieu Process
PennyMac will review your eligibility for the program. We'll figure out the property value, look at what you owe, and consider your current financial hardship. We'll ensure the title is free and clear of any other debts owed (such as junior liens held by other lenders or homeowner/condo associations, judgment liens or tax liens).
Once approved, you'll need to move by an agreed-upon date. You'll need to remove all of your personal belongings and trash, but leave the home in clean and safe condition.
Because this option requires you to move to a new home, PennyMac offers a one-time cash incentive to help with your relocation expenses. You’ll receive this money at the closing, provided you have met all of the requirements above. The amount of the incentive depends on the state where your property is located and how long your mortgage has been delinquent. In addition, the amount of money available to you decreases with time as the costs for the lender increases, so it doesn't help delaying the process.