What is the term used when a borrower voluntarily conveys their deed before foreclosure?

The term used when a borrower voluntarily conveys their deed before foreclosure is known as a deed in lieu of foreclosure. This process occurs when a borrower finds themselves unable to keep up with mortgage payments and opts to hand over the property to the lender in an effort to avoid the lengthy and costly process of foreclosure. By agreeing to this arrangement, the borrower can potentially mitigate the damage to their credit score and may be released from further liability on the mortgage debt.

This option is distinct from other terms listed. A foreclosure sale refers to the legal process that follows when a lender takes possession of a property due to the borrower's default on the mortgage, whereas a short sale involves selling the property for less than the owed mortgage balance with lender approval. Property conveyance is a more generic term that simply refers to the transfer of property from one party to another and does not specifically pertain to the situation of default or foreclosure.