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Real property

deed in lieu of foreclosure

A deed in lieu of foreclosure—often referred to as a deed in lieu—is a deed by which a borrower (mortgagor) transfers fee simple title to a lender (mortgagee) to satisfy a mortgage debt.

A deed in lieu of foreclosure is a substitute for the foreclosure process and a delinquent debtor or mortgagor may avoid paying a deficiency balance (if the home is worth less than the amount owed) and may lessen the impact on their credit report by signing a deed in lieu.

In New Mexico, a deed in lieu of foreclosure is a legal instrument where a borrower voluntarily transfers the ownership of their property to the lender to satisfy the outstanding mortgage debt and avoid the foreclosure process. This option can be beneficial for both parties; the borrower may avoid the negative consequences of a foreclosure on their credit report and potentially be relieved from the obligation to pay any deficiency balance if the property's value is less than the mortgage debt. For the lender, it can be a quicker and less costly resolution compared to foreclosure. However, it's important to note that lenders are not obligated to accept a deed in lieu of foreclosure, and it may have tax implications for the borrower. Additionally, the agreement should be in writing and both parties must agree to the terms. Borrowers considering this option should consult with an attorney to understand the full legal implications and ensure that their rights are protected.

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Real property

deed in lieu of foreclosure

Individual & Family Legal Plan

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New-Mexico State Code

New-Mexico State Code

Real property

deed in lieu of foreclosure

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