What describes the transfer of a home's title back to the loan servicer in exchange for debt cancellation?

The process described involves the transfer of a homeowner's title back to the loan servicer as a means to cancel the debt associated with that property. This specifically aligns with a deed in lieu of foreclosure, which is a legal process where the homeowner voluntarily relinquishes the title of their property to the lender in exchange for the cancellation of the mortgage debt.

This option is particularly relevant in situations where homeowners are struggling to make mortgage payments and wish to avoid the lengthy and often costly process of foreclosure. By choosing a deed in lieu, they can mitigate some of the financial and emotional stress associated with losing their home while also allowing the lender to quickly take possession of the property to sell it and recover their losses.

Other options, such as a short sale, involve selling the home for less than the amount owed on the mortgage, but do not involve transferring the title directly to the loan servicer for debt cancellation. Foreclosure is a legal process initiated by the lender when the borrower defaults, leading to a court proceeding and loss of the home, not a voluntary transfer. Loan forgiveness is a broader term that can apply to various forms of debt relief but does not specifically refer to the action of transferring property title.