What is the typical outcome of a deed in lieu of foreclosure for the borrower?

A deed in lieu of foreclosure typically results in the borrower losing their legal rights to the property. This process involves the borrower voluntarily transferring ownership of the property to the lender to prevent foreclosure. By doing so, the borrower relinquishes their rights to the property, allowing the lender to take possession and sell it to recover the outstanding loan balance.

This outcome is significant for the borrower because it is an alternative to going through the lengthy and often more damaging foreclosure process. While it may mitigate some negative impacts, such as potential public records associated with foreclosure, it still means the borrower no longer holds any legal interest in the property.

Other outcomes presented in the choices do not align with the typical results of a deed in lieu of foreclosure; borrowers do not receive compensation, see credit score improvements, or gain ownership in a new property just by participating in this process. In fact, the impact on credit may still be negative, reflecting the loss of the property.