Final answer:
A 'deed in lieu of foreclosure' is a legal agreement in real estate where a borrower voluntarily transfers the ownership of a property to the lender to settle a debt instead of going through the foreclosure process.
Step-by-step explanation:
A 'deed in lieu of foreclosure' is a legal agreement in real estate where a borrower voluntarily transfers the ownership of a property to the lender to settle a debt instead of going through the foreclosure process. It allows the borrower to avoid the negative impact of foreclosure on their credit history and allows the lender to take possession of the property without having to go through the lengthy and costly foreclosure process.
For example, if a homeowner is facing financial hardship and cannot make mortgage payments, they may choose to offer their lender a deed in lieu of foreclosure. The lender would then accept the deed and cancel the debt, effectively becoming the new owner of the property.