Deed in lieu – If you don’t want your home and/or absolutely cannot afford it, you can offer the servicer a deed-in-lieu (pronounced “loo”) of foreclosure. This means you give your house back to the servicer in exchange for avoiding having a foreclosure on your credit record. 

    –  Important: If your house has declined a lot in value,

       the servicer may ask you to sign a note to pay back

       the difference between what the house is worth and

       what you owe. This is called a deficiency note. If you

       ask at the time you offer the deed-in-lieu, the servicer

       may agree not to pursue a deficiency.  

    –  If you have a second mortgage or if you have a lot of

       judgments against you from previous debts you probably

       won’t qualify for a deed-in-lieu.