deed in lieu of foreclosure? what mechanism or standards are applied to decide whether this approved?

Brian said it well. A deed in lieu does not extinguish junior liens the way a full foreclosure does.

It's strictly a lenders decision and there are no standard set of guidelines.. some lenders wont allow a DIL regardless of the situation, while others make you submit ton's of paperwork proving your hardship before allowing it.. but it's all up to the individual lender.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Good Morning! In most, if not all situations, you need to have gone through all other loss mitigation options before a DIL is offered, which include a possible Loan Modification Review and a Short Sale. Most lenders will not automatically grant you the option for a DIL without first making sure they have gone through the proper protocols as noted above. The best way to check on your option would be to call your 1st Lien Holder to find out what you may be eligible for and go from there. That will help you determine what you need to do, if anything to proceed forward. Good Luck!