In one sentence
A negotiated transfer of a property from a defaulting borrower to the lender, avoiding a formal foreclosure.
The longer version
In a deed in lieu, the borrower voluntarily conveys the property to the lender to satisfy the debt, sidestepping the time and cost of foreclosure. Both sides negotiate terms, including any release of liability.
Deeds in lieu require careful diligence on liens and the property's condition, since the lender takes the asset directly, and they are documented like a modified closing.
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