A deed in lieu is when the homeowner, who's likely in default or facing foreclosure, agrees to "sign over" their home back to the lender holding the note. The lender usually agrees to release the homeowner from all liability. The homeowner is allowed to move on and the lender reduces their costs associated with a full foreclosure or even a short sale. Once the deed in lieu is finalized and recorded the bank becomes the owner of the property and will likely contact a local real estate broker to sell the property at or slightly below market value. If you're in default or facing foreclosure contact your lender to find out if deed in lieu is an option.