What is it called when a homeowner offers to transfer property to a bank to avoid foreclosure?

The situation described involves a homeowner who is attempting to avoid foreclosure by transferring their property directly to the lender, which is referred to as a "deed in lieu of foreclosure." This legal process allows the homeowner to voluntarily give up their rights to the property in exchange for relief from the mortgage obligation. It can be a beneficial alternative to foreclosure, as it simplifies the process, allows for a smoother transition, and can potentially protect the homeowner from the negative consequences of a foreclosure on their credit report.

In contrast, a deed in trust is a financial instrument that ties a property to a loan and involves a third-party trustee, which does not relate to the transfer of property to avoid foreclosure. A deficiency judgment arises when a lender seeks to recover the remaining balance owed on a mortgage after foreclosure has occurred and the property sells for less than the outstanding loan amount. A quitclaim deed is used to transfer ownership rights without any warranty of title, often between family members or in situations where the seller is not guaranteeing the status of the property title, but it does not specifically pertain to avoiding foreclosure.