Escrow & Title
In Maine, a 'deed in lieu of foreclosure' occurs when a borrower:
ASells the property to a third party to avoid foreclosure
BVoluntarily conveys the property to the lender to avoid a formal foreclosure✓ Correct
CFiles bankruptcy to halt foreclosure
DObtains a restraining order against the lender
Explanation
In a deed in lieu of foreclosure, the defaulting borrower voluntarily deeds the property to the lender in exchange for being released from the mortgage debt, avoiding the formal foreclosure process.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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