A document that transfers ownership of a home from the homeowner to the mortgage lender to avoid foreclosure proceedings. A homeowner will issue the deed-in-lieu once they are in default. Lenders will verify that the homeowner can no longer afford his mortgage by investigating his financial situation and job status. If the lender accepts the deed-in-lieu, the homeowner must move out of the home usually within a month and his credit score will go down, making it more difficult to get a loan in the future. However, lenders will rarely accept the deed-in-lieu, since they may be able to get more money for the home by foreclosing and selling it as an REO (Real Estate Owned Home). If the lender doesn't accept the deed-in-lieu, the homeowner may try to sell his home as a short sale if he owes more on the mortgage than the home is worth. If that fails, the lender will proceed with the foreclosure process and repossess the home.

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