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 Ohio, a deed in lieu of foreclosure is a legal instrument where a homeowner, who is unable to make mortgage payments, voluntarily transfers the ownership of their property to the lender to satisfy the outstanding debt and avoid foreclosure. This process can be beneficial to the borrower as it may prevent a public foreclosure proceeding, potentially reduce the negative impact on the borrower's credit history, and sometimes relieve the borrower from the obligation to pay any deficiency balance if the property's value is less than the mortgage debt. However, the lender must agree to accept the deed in lieu of foreclosure, and it is not a right unilaterally available to the borrower. The terms of the agreement, including any release of the deficiency balance, must be negotiated between the borrower and the lender. It is important for borrowers considering this option to consult with an attorney to understand the implications, ensure that the transaction is structured properly, and to negotiate terms that are in their best interest.