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A Mortgage Release lets homeowners voluntarily transfer their property back to their lender to avoid foreclosure. It's also called a "deed in lieu of foreclosure" and offers a more dignified exit from an unaffordable home loan than going through the foreclosure process.

When approved, this agreement completely releases borrowers from their mortgage debt and future payments. While it still impacts credit scores, it generally causes less damage than foreclosure and can include relocation assistance from the lender. Most major U.S. mortgage servicers offer this option to qualifying homeowners who can't sell their home or modify their loan terms.

Consider a Mortgage Release when you're significantly behind on mortgage payments and can't catch up through loan modifications or refinancing. This option works best when your home's value has dropped below what you owe and selling it won't cover your mortgage debt.

The timing is crucial - initiate a Mortgage Release before entering foreclosure proceedings to maintain more control over the process. It's particularly valuable if you need a clean break from the property, want to avoid the stigma of foreclosure, and could benefit from relocation assistance. Many homeowners use this path during major life changes like job loss, divorce, or medical emergencies that make payments impossible.

• Immediate Departure: You move out right away and transfer the deed, often receiving relocation assistance from the lender
• Lease Option: You can stay in the home as a renter for up to 12 months before transferring ownership
• Sale-for-Less Option: The lender allows you to sell the home for less than you owe, then releases remaining mortgage debt
• Deed and Stay: You transfer ownership but can remain in the property for up to three months rent-free while planning your move

• Homeowners: Initiate the Mortgage Release process when unable to maintain payments, seeking relief from mortgage debt and a structured exit from the property
• Mortgage Lenders: Review and approve release requests, set terms for property transfer, and manage the deed transfer process
• Real Estate Attorneys: Draft and review release documents, ensure legal compliance, and protect both parties' interests during the transfer
• Housing Counselors: Guide homeowners through options, explain consequences, and help navigate the release process with lenders
• Title Companies: Handle property title searches, facilitate deed transfers, and ensure clean title passage to the lender

• Property Details: Gather current mortgage statement, property deed, tax records, and recent property valuation
• Financial Documentation: Compile proof of financial hardship, bank statements, tax returns, and income verification
• Title Search: Confirm there are no additional liens or claims against the property
• Lender Requirements: Contact your mortgage servicer to understand their specific Mortgage Release program criteria
• Move-out Plan: Create a timeline for vacating the property and document any relocation assistance offered
• Release Terms: Review all release conditions, including potential tax implications and credit reporting impacts

• Property Description: Detailed legal description of the property, including address and parcel number
• Transfer Terms: Clear statement of voluntary property transfer from homeowner to lender
• Debt Release: Explicit release of borrower from all mortgage obligations and remaining debt
• Move-out Agreement: Specific dates and conditions for vacating the property
• Representations: Homeowner's confirmation that transfer is voluntary and property is in acceptable condition
• Signatures: Notarized signatures from all parties on deed and property title
• Consideration: Statement of any relocation assistance or other compensation provided

A Mortgage Release differs significantly from a Release of Mortgage. While both documents involve ending mortgage obligations, they serve very different purposes and occur at different stages of homeownership.

• Timing and Circumstance: A Mortgage Release happens during financial hardship when you can't pay your mortgage, while a Release of Mortgage is issued after fully paying off your loan
• Property Ownership: With a Mortgage Release, you surrender ownership to the lender; a Release of Mortgage confirms you maintain ownership, free and clear
• Financial Impact: A Mortgage Release affects credit scores and may have tax implications; a Release of Mortgage positively reflects loan completion
• Documentation Purpose: Mortgage Release documents property transfer and debt forgiveness; Release of Mortgage removes the lender's claim on an already-paid property