Before approving a Borrower for a Deed-in Lieu (DIL), the Mortgagee must notify the Borrower in writing of the following:
- The Mortgage must be in Default on the date the DIL special warranty deed is executed, pursuant to Section 204 of the National Housing Act (12 U.S.C. 1710).
- DIL transactions are generally reported to consumer reporting agencies, and will likely affect the Borrower’s ability to obtain another Mortgage and other types of credit.
- If the Borrower is a service member, it is recommended that the Borrower obtain guidance from their employer regarding the DIL’s impact on their security clearance and employment.
- DIL transactions are generally reported to the Credit Alert Verification Reporting System (CAIVRS), which may result in the Borrower’s inability to obtain government financing or affect other government benefits for a certain period of time.
Any questions may be directed to the FHA Resource Center Toll-Free Telephone Number at (800) CALLFHA (225-5342) or by email to answers@hud.gov. Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at (800) 877-8339.
For policy information see Handbook 4000.1 III.A.2.l.iii(B) at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh