Escrow & Title
What is a deed in lieu of foreclosure?
AA deed used in foreclosure auctions
BA transaction where a borrower voluntarily conveys the property to the lender to avoid foreclosure✓ Correct
CA court order transferring title
DA deed for distressed properties
Explanation
A deed in lieu of foreclosure is a voluntary conveyance of the property from the borrower to the lender in exchange for cancellation of the loan. It avoids the cost and time of foreclosure, though the borrower still faces credit consequences.
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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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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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