Deed-In-Lieu Frequently Asked Questions – HUD: “A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.

QUESTION 1 – When a mortgagor has been approved for utilizing a DIL of foreclosure, how much time does a mortgagee have to complete the DIL?

ANSWER -A DIL of foreclosure must be completed within 90 days of initiation of the process.

QUESTION 2 – Does HUD allow $2,000 to pay off second liens when determining if a mortgagor is eligible for a DIL?

ANSWER – Effective with Mortgagee Letter 2002-13, HUD increased the DIL of foreclosure consideration to not to exceed $2,000. Therefore, with the mortgagor’s consent, this consideration may be utilized to pay off junior liens to clear the title as stated in Mortgagee Letter 2000-05.”