deed in lieu of foreclosure

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Deed in lieu of foreclosure is an alternative to foreclosure for homeowners by deeding their house to the lending institution. Foreclosure can be long, public events that are embarrassing and draining on homeowners, but deed in lieu of foreclosure allows a quicker option where the lender agrees to take the house instead of the debt owed. In some states, the debtor may still owe any difference between the value of the house and the amount owed if the house is worth less. 

[Last updated in June of 2021 by the Wex Definitions Team]