What is an agreement between a borrower and a bank, where the borrower hands over property to avoid foreclosure?

The term "deed in lieu agreement" refers to a legal arrangement in which a borrower voluntarily transfers ownership of their property back to the lender, commonly to avoid the more drastic and lengthy process of foreclosure. This agreement is advantageous for both the borrower and the bank: the borrower mitigates the negative consequences of foreclosure on their credit report and the bank can take possession of the property quickly without the expenses associated with foreclosing.

In this context, a deed in lieu can allow borrowers to relocate and settle any outstanding debt more amicably, as the transaction is typically agreed upon without the confrontation and legal proceedings that foreclosure entails. This process can also streamline the bank's ability to sell or manage the property thereafter.

The other choices represent different concepts related to property and financing. An acceleration agreement refers to a clause allowing the lender to demand full repayment of a loan under certain circumstances; a foreclosure notice is a formal notification that a lender intends to take control of a property due to payment delinquency; and a mortgage modification involves altering the terms of an existing mortgage agreement to make it more manageable for the borrower. None of these alternatives describe the voluntary property transfer meant to prevent foreclosure, making the deed in lieu agreement the appropriate choice.