Escrow & Title
In Massachusetts, a 'deed in lieu of foreclosure' allows a borrower to:
ARefinance at a lower rate to avoid foreclosure
BVoluntarily transfer title to the lender to satisfy the debt and avoid the foreclosure process✓ Correct
CSell the property to a third party at a discount to pay off the loan
DDefer mortgage payments for 6 months without penalty
Explanation
A deed in lieu of foreclosure is a voluntary agreement where the borrower transfers title to the lender in exchange for release from the mortgage obligation. It avoids the time and expense of formal foreclosure.
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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).
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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