A South Carolina homeowner who is behind on mortgage payments wants to avoid foreclosure by voluntarily transferring the property back to the lender. The lender agrees. Which instrument would be used to accomplish this, and what is the primary benefit to the homeowner?
Correct Answer
D) A deed in lieu of foreclosure; the homeowner avoids having a formal foreclosure judgment on their credit record
A deed in lieu of foreclosure is a voluntary conveyance of the property from the borrower to the lender to satisfy the mortgage debt and avoid the judicial foreclosure process. The primary benefit to the homeowner is avoiding a formal foreclosure judgment on their credit history, which is generally less damaging than a foreclosure. In South Carolina, because foreclosure is judicial and court-supervised, the deed in lieu also spares both parties the time and expense of circuit court proceedings.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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