What process allows a borrower to voluntarily transfer property title to a lender instead of going through foreclosure?

The process that allows a borrower to voluntarily transfer property title to a lender instead of going through foreclosure is known as a deed in lieu of foreclosure. This arrangement permits the borrower to surrender their property to the lender, effectively allowing them to avoid the lengthy and often costly process of foreclosure proceedings.

In this scenario, the borrower typically seeks to resolve their mortgage default by giving the title of the property to the lender. This transfer can result in a more amicable resolution for both parties, as it can be less damaging to the borrower's credit rating compared to a foreclosure. Additionally, lenders may prefer a deed in lieu because it can save them legal fees and the hassle of conducting a foreclosure sale.

Other options like bankruptcy, short sale, and loan modification do not directly involve the voluntary transfer of property title to the lender as a means of resolving mortgage defaults. Bankruptcy can provide a way for borrowers to reorganize their debts and may lead to the discharge of other financial obligations, while a short sale involves selling the property for less than the owed mortgage with the lender's approval. Loan modification refers to changing the terms of a mortgage to make payments more manageable, rather than transferring title.