How Much Time Does a Bank Give You to Move With a Deed in Lieu?

What is a Deed in Lieu?

A deed in lieu of foreclosure can stop or prevent a mortgage foreclosure. This mortgage assistance is available to homeowners with an imminent risk of mortgage foreclosure. They've already defaulted on the mortgage loan, and if unable to negotiate a deed in lieu, their mortgage lender will soon step in and take back the property. A deed in lieu involves signing over a home to the mortgage lender. Borrowers give up ownership and then walk away from the property.

Vacating the Home

Getting a deed in lieu approved by a mortgage lender isn't a quick process. Lenders review current finances, debts and the reason for hardship. According to Bank of America, getting an approval or denial can take up to three months. Upon approval, lenders send specific documents to borrowers, and borrowers must sign, notarize and return these documents to start the deed in lieu process. For those who meet the bank's requirements and qualify for a deed in lieu of foreclosure, they have 30 days (from the date the lender receives the documents) to find a new residence and vacate the property. In some instances, lenders provide monetary assistance to help borrowers with moving expenses.

Deed for Lease

After negotiating a deed in lieu and having a lender approve the request, borrowers can ask about a deed for lease. This temporary solution lets borrowers live in the house as renters after ownership transfers to the lender. This removes the immediate need to find a new place. In order for a deed for lease to benefit previous owners, lenders discount the rent price.

Requirements and Consequences

Getting a deed in lieu of foreclosure isn't a simple task, and approvals require work on an owner's part. Before a lender will even consider this alternative, borrowers must place their home on the market for 90 days to locate a buyer. When requesting a deed in lieu, lenders will question whether an owner attempted to sell the home. While a deed in lieu can stop foreclosure and remove this burden, credit damage after a deed in lieu is typical -- but less damaging than mortgage foreclosure. The actual damage varies, but borrowers can possibly improve their credit scores and qualify for a new mortgage loan faster than if they had a foreclosure on their record.