Escrow & Title
In New Mexico, a 'deed in lieu of foreclosure' is used when a borrower:
AWants to purchase a foreclosed property
BVoluntarily conveys the property to the lender to avoid foreclosure proceedings, typically in exchange for the lender releasing the borrower from the debt✓ Correct
CRefinances a delinquent loan
DContests the foreclosure in court
Explanation
A deed in lieu of foreclosure is an alternative to formal foreclosure proceedings: the borrower voluntarily deeds the property to the lender in exchange for release from the mortgage debt. It is faster than foreclosure but the lender must agree, and the borrower must have clear title.
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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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
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