Escrow & TitleIntermediateArizona Exam

Deed-in-lieu of foreclosure in Arizona means the borrower:

ASells the property to a third-party buyer through a short sale, with the lender's written approval to accept less than the full mortgage payoff from the sale proceeds

BVoluntarily deeds the property to the lender to satisfy the debt and avoid formal foreclosure proceedingsCorrect

CFiles for Chapter 13 bankruptcy protection to invoke the automatic stay and prevent the lender from proceeding with a trustee's sale while the reorganization plan is approved

DRefinances the existing delinquent loan with a new lender to pay off the outstanding balance and cure the default before the trustee's sale can be completed

Why Voluntarily deeds the property to the lender to satisfy the debt and avoid formal foreclosure proceedings Is Correct

Answer B: Voluntarily deeds the property to the lender to satisfy the debt and avoid formal foreclosure proceedings

A deed-in-lieu of foreclosure is when the borrower voluntarily conveys the property to the lender in exchange for release from the mortgage obligation, avoiding the formal foreclosure process (though it still damages credit).

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Short Sale

A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

People Also Study

Key Terms to Know

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Pre-Approval

A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.

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