Escrow & Title
What is a 'deed in lieu of foreclosure' and how does it work in Pennsylvania?
AA deed the lender provides to the borrower in lieu of recording the mortgage
BA voluntary transfer of property from a defaulting borrower to the lender to avoid the foreclosure process, extinguishing the mortgage debt✓ Correct
CA court-ordered deed transfer substituting for the sheriff's deed in judicial foreclosure
DA deed used when a guarantor assumes liability in lieu of the original borrower
Explanation
A deed in lieu of foreclosure is a voluntary transfer where a defaulting borrower conveys the property to the lender to avoid the foreclosure process. In Pennsylvania, the borrower must have clear title (no junior liens) for the lender to accept a deed in lieu, since taking the deed would otherwise require the lender to assume subordinate liens.
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