Some homeowners, when the know they will no longer be able to afford their home, decide that they will simply move out of the house. They may do this for a number of reasons: the bank may be calling them incessantly and they want an escape, they may believe that moving out will allow the bank to take the home back quicker, or they may just have found another place to live. Abandoning a home to foreclosure, though, is often the least desirable option when attempting to stop foreclosure. Surrendering the house through a deed in lieu of foreclosure will have much the same end results in terms of allowing the homeowners to move out and move on with their lives, but they will also be able to preserve a small amount of their credit, as well.

If the foreclosures victims just move out and abandon the home, this action will not surrender the title to the home. It is simply abandoning the property. The foreclosure process will continue since the foreclosure victims are still the legal owners of the house and the bank will have to take it back through the court system. Just moving out does not transfer ownership, as they could move out to rent the house to a tenant, go on vacation for a month, or any other reason. The bank and the court have no ability to take the house back just because the homeowners are no longer living there, as they have no real way of knowing why the homeowners moved out, or if they will return. Unless the foreclosure victims let the bank know that they have abandoned the house, the bank will simply believe that their phone calls and letters are continuing to be ignored by the foreclosure victims.

The mortgage company can, however, change the locks and prevent the house from vandalism if the foreclosure victims have moved out. This is not considered taking the property back but protecting the lender's interest in having a property that is not destroyed by thieves and vandals. In addition, the bank will not receive title to the home by having the locks changed, because there is still no transfer of ownership rights. The homeowners are simply assumed to have abandoned the house and the bank has the right to protect the collateral for the loan. In most cases, if the homeowners return to the property after the locks are changed, they can contact the court system or the county sheriffs department to regain entry into the house -- they are still the legal owners so they have the right to possess the property even throughout the foreclosure process.

Moving out of the house and going through the foreclosure process will have the same negative effects on the homeowners' credit as if they stayed in the house and went through foreclosure. A foreclosure will show on their credit report and will drag down their credit scores. Simply moving out, because it does not materially affect the foreclosure process itself as it works through the courts, will do nothing to help the homeowners either stop foreclosure on the home or recover their credit. In fact, homeowners may as well stay in the property and begin saving up an emergency fund or paying down other debts to utilize their time in the house in the most effective way. Even if they can not afford the mortgage, it may be better to make good on other debts, such as car loans or credit cards, rather than take on a new housing payment or renting an apartment right away.

Surrendering a house is usually done with a deed in lieu of foreclosure, and is done before the house is sold at sheriff sale. Homeowners can call their lender to offer the deed in lieu of foreclosure, and the bank will evaluate whether to accept or not. A deed in lieu will be slightly better on the homeowners' credit, because they did at least something to avoid the entire foreclosure process, even if it was merely giving the property back and admitting that they could not afford the mortgage any longer. The fact that this option will allow the lender to avoid a costly legal battle will give the foreclosure victims a slightly less negative mark on their credit, though, as it shows they worked with the bank to transfer the property and give the collateral back instead of face foreclosure.

Abandoning a home does not affect the foreclosure process or its negative consequences. A deed in lieu can effectively surrender a house to the bank. This makes offering the bank a deed in lieu of foreclosure a much wiser decision for the long-term financial health of the foreclosure victims. Rather than leaving the house before the foreclosure process is over, homeowners can stay until the transfer is completed, using the time to get out of debt, save up an emergency fund, or otherwise improve their financial health. Once the deed is transferred to the bank, the homeowners will then be free to move out of the house, having found a solution to stop foreclosure and avoid the more devastating effects of the foreclosure process.

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