A Deed an Lieu Might Be Part of Well Timed Walkaway  Away

We pulled this Deed in Lieu of Foreclosure letter from our archives.  (see the final section of this page.)

We used a variation of this letter successfully a few times but please understand lenders rarely accept them.

Almost every lender much preferred short sale or foreclosure and rarely accepted deeds in lieu.

I believe one of the major reasons is that they preferred the title they received after a foreclosure and with short sales

they do not have to worry about title

Note to Home Owners –

Deeds in lieu frequently impacts your credit more harshly than a short sale.

Back in the last cycle deeds in lieu had a similar impact to a foreclosure in terms of score.

However, (especially for business people) deed in lieu show that you worked with your lender.

So if you ever have to open up a business line of credit… the lender may appreciate the DIL over the foreclosure.


Can be part of a good Strategic Default or Walkaway

I would say that even if you are planning a strategic default or work away…

If you wish to stay in your home for as long as possible making a deed in lieu offer at the right time in the foreclosure process may

by you 60 days or more time.

Let us know if you would like to make a deed in lieu offer during a strategic default or walkaway.





May 15, 2007


Mr. Joe Banker

Lender Bank Mortgage Corporation

1234 Broadway Suite. 000

Big City, CA 00123




Re: Lender Bank Loan # 001122334 to Mary C. Homeowner

Property Address: 123 Main St., Smallville, CA 91234


Mr. Smith:


This firm represents your borrower, Mary C. Homeowner in this pre-foreclosure matter regarding the above-identified loan and property.  It should be noted that the borrower is voluntarily entering into this negotiation. 

Ms. Homeowner has authorized us to offer a deed in lieu of foreclosure and she is willing to turn over the premises to you immediately upon her receipt of your acceptance. This offer is intended to satisfy her obligations under the mortgage, note, and trust documents applicable to the relationship between your institution and Ms. Homeower, and to terminate that relationship.

This letter and any future communications regarding this matter are confidential settlement negotiations as to which Ms. Homeowner wishes to assert all her legal privacy rights and confidentiality privileges. Please refrain from disclosing this letter or any other private information of or regarding Ms. Homeowner without her express consent. Also, to the extent she may have previously authorized you to use or disclose her private information, she expressly withdraws such authorization effective immediately.


To the extent you may believe you have any authorization to use or disclose her private information based on any of the following, she expressly revokes such delegation and instructs you that you no longer have any such authority:


  1. her receipt of notices from you of your privacy policies;
  2. her receipt of any other communications from you;
  3. any implied or inherent delegation of authority, (d)
  4. any other action or inaction by you or her.


We would also like to request that you immediately send us Lender Bank’s pre-foreclosure package. Ms. Homeowner has instructed this firm to compile all pertinent information so that she will be able to implement alternative procedures immediately if you decide not to accept her offer of a deed in lieu.


Finally, our office has determined that Ms. Homeowner may have an incomplete set of the documents relevant to her loan. Accordingly, we would like to request that you make available to us a full set of all loan-related documents signed by her or presented to her at or before the making of this loan, including but not limited to all good faith estimates, all HUD-1s or other HUD forms, all escrow instructions, all settlement statements, all amendments to any loan documents or loan terms, and all formal notices of loan changes, loan conditions, or loan requirements.


Please let me know if there is anything I can do to ensure that we proceed as efficiently and cost effectively as possible.


Thank you for your anticipated professional cooperation and courtesy.


Law Firm or