Freddie Mac: Deed-in-Lieu
Are you struggling to avoid foreclosure, but can’t stay in your home because you don’t qualify for a reduced mortgage payment in the form of a loan modification? Have you been unsuccessful in your attempts to sell the property?
If your mortgage is owned by Freddie Mac, another option that may be available to you is a deed-in-lieu – an alternative to foreclosure that allows you to voluntarily transfer clear and marketable title of your property (i.e., the house and the land) to the owner of your mortgage in exchange for the discharge of their mortgage debt.
Freddie Mac simplifies and streamlines the deed-in-lieu option by:
- Speeding up the decision-making process by delegating approval authority to our servicers (the organization to which you send your mortgage payments);
- Requiring servicers to acknowledge receipt of your deed-in-lieu request in as little as three business days;
- Expanding eligibility to a greater number of homeowners, regardless of their delinquency status; and
- Offering up to $3,000 in relocation assistance for homeowners who meet certain requirements. If you have a second mortgage or other subordinate mortgage on your property, Freddie Mac may pay up to $6,000 to the other mortgage holder(s) to have them forgive your debt and release their lien. This allows you to leave the property free and clear.
To learn more about the deed-in-lieu option offered by Freddie Mac, reach out to your servicer as soon as possible. They can help you determine your eligibility and provide guidance on next steps.
Are You Eligible?
You may be eligible for our deed-in-lieu option if:
- Your mortgage is owned by Freddie Mac
(visit our Loan Look-up Tool find out)
- You submit a complete Borrower Response Package to your servicer describing your financial situation. Your servicer or a HUD-approved housing counselor can provide guidance on what is required for the package.
- You are either current or delinquent on your mortgage payments and:
- Can provide evidence of an eligible financial hardship;
- Can convey clear and marketable title to the property to Freddie Mac;
- You didn’t qualify for a loan modification, or you did qualify for a loan modification but couldn’t accept it because you need to move out of your house; and
- You have tried unsuccessfully to sell the property through the short sale option offered by Freddie Mac.
- In addition, if you are current or less than 31 days delinquent on your mortgage, you must:
- Occupy the property as your primary residence; and
- Have a monthly debt-to-income ratio greater than 55 percent (some service members with Permanent Change of Station, or PCS, orders are exempt from this requirement).
In some cases, if you have the financial ability, you will be required to make a one-time payment prior to the closing of a deed-in-lieu or sign a new promissory note to pay for a portion of the unpaid balance after the transaction closes.
Additional Flexibility for Service Members
Service members who receive Permanent Change of Station (PCS) orders qualify for additional flexibility under our deed-in-lieu option, including:
- Enabling your PCS orders to be considered an eligible hardship if the location is greater than 50 miles from the mortgaged premises;
- Additionally, if the property is your primary residence purchased on or before June 30, 2012:
- Eliminating the 55 percent or greater monthly debt-to-income ratio requirement; and
- Waiving any cash or promissory note contribution requirement.
Learn more about our mortgage relief options for service members.
Steps to Get Started with a Deed-in-Lieu
- Find out if Freddie Mac owns your mortgage by visiting our Loan Look-up Tool
- Get prepared and call your lender
Note: This page is meant to provide general information about our deed-in-lieu, and is not a comprehensive summary. Many specific additional terms, conditions, and limitations apply. Please contact your servicer for more detailed information about the program and eligibility requirements.
Tools & Resources
- CreditSmart® Online Training
- Get the Facts on Foreclosure
- Working with Your Lender
- Find a HARP Lender
- Avoiding Foreclosure
- Getting Back on Track After Foreclosure
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