You can’t give your house back to bank just by mailing the keys and walking away. Until the bank forecloses or formally accepts the house, you still own it, and you’re still responsible for taxes, insurance, code violations, and the loan. The formal way to give your house back to bank is called a deed in lieu of foreclosure. Here’s how it works in Georgia, and why selling first is often the better move.
What happens if you just leave
If you move out and stop paying, the lender starts foreclosure. In Georgia that can mean an auction on the courthouse steps within months. Meanwhile:
- The house is still yours. Fines, city liens, and liability for injuries on the property stay with you.
- An empty house loses value fast, which can raise what you owe if the auction comes up short.
- The foreclosure stays on your credit report for seven years.
How a deed in lieu works
With a deed in lieu, you sign the house over to the lender, and the lender releases you from the mortgage. The general process:
- Call your servicer’s loss mitigation department and apply. Expect to send income, hardship, and expense documents.
- Many lenders require you to try to sell the house first, often by listing it for a few months.
- The title has to be clean. A second mortgage, HOA lien, or judgment can kill the deal.
- If approved, you sign the deed, move out by an agreed date, and leave the house broom-clean. Some lenders offer a small relocation payment.
Why the bank may not take your house back
A lender only takes the house back if it expects to lose less than with a foreclosure. Banks commonly turn down a deed in lieu when:
- There’s a second mortgage or other lien.
- The house needs serious repairs.
- You haven’t tried to sell it first.
- You have income or assets they think could cover the payments.
The approval process can take months, and the foreclosure clock often keeps running while you wait.
Get these in writing if you do a deed in lieu
- A deficiency waiver. Without it, the lender may still be able to come after you for the difference between the loan and the house’s value.
- How it will be reported to credit bureaus.
- Your move-out date and any relocation money.
Also ask a tax professional whether any forgiven debt counts as taxable income for you.
The option most people skip: selling first
Before you give your house back to bank, check whether you can sell it. If the house is worth about what you owe or more, selling it pays off the loan in full. There is no foreclosure or deed in lieu on your record, no deficiency to worry about, and any equity goes to you. When time is short, a cash buyer can close in 7 to 21 days at a Georgia closing attorney’s office, often before the lender would even finish reviewing a deed in lieu application.
| Walk away | Deed in lieu | Sell first | |
|---|---|---|---|
| Lender approval needed | No | Yes | No (unless short sale) |
| Credit impact | Foreclosure, 7 years | Settled loan, about 4-year wait for a new mortgage | Late payments only |
| Risk of owing more | Yes | Low with a written waiver | No, if the sale covers the loan |
| You keep equity | No | No | Yes |
| Time | Months | Often months | 1 to 3 weeks with cash |
FAQ
Can I give my house back to bank if I’m current on payments?
Lenders rarely accept a deed in lieu from a borrower who is current. Selling is usually the only practical route.
What if I owe more than the house is worth?
Ask about a short sale or deed in lieu, and talk to a Georgia attorney. A cash offer can still help by giving the lender a real number to approve.
How fast can I get out from under the house?
A cash sale can close in about a week once the payoff and title are clear.
Talk to us before you hand over the keys
Southeast Homebuyers will look at your payoff and the house and tell you honestly whether a sale makes more sense than giving your house back to bank. Read about other ways to stop foreclosure before giving your house back to bank or get your cash offer. Call (866) 780-8169.
General information only, not legal or tax advice.