Escrow & Title
In Pennsylvania, a 'deed in lieu of foreclosure' is an arrangement where:
AThe lender gives the borrower a new deed
BThe borrower voluntarily conveys the property to the lender to satisfy the mortgage debt and avoid foreclosure✓ Correct
CThe court orders the borrower to give up the deed
DA third party purchases the deed at the foreclosure sale
Explanation
A deed in lieu of foreclosure allows a Pennsylvania borrower to voluntarily deed the property back to the lender in exchange for release from the mortgage debt, avoiding the formal foreclosure process. The lender must agree, and there may be tax implications (cancelled debt income). It can be faster and less damaging to credit than foreclosure.
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