Can a quitclaim deed stop a foreclosure?

Nothing could be further from the truth, however, and simply signing over the deed to the house to a third party will put the owners in a much more vulnerable situation than when their own names were on the title. Using a quitclaim deed or other transfer document will also do nothing to make the bank end its lawsuit to take the home.

Transferring ownership of a house in foreclosure does not relieve the original borrowers of their obligation and responsibility to pay the mortgage that is secured by the property. When they purchased the house, they promised to pay back to the bank a set amount of money at a certain interest rate, and transferring the deed will not change the fact that the house is collateral for the mortgage loan. The owners may be able to transfer ownership of the house at a later date, but their original promise to pay the bank or face the loss of the property will not be altered.

There is also a danger that transferring the title into another party's name will activate a part of the mortgage called the "Due on Sale" clause. This means that, if the homeowners transfer ownership at any time before they have paid off the mortgage in full, the entire remaining amount of the loan will be due immediately. Because most deed documents state the consideration paid for the property, banks view this as a sale of the house, even if it is only for a nominal amount like $10. Such transfers will activate the Due on Sale clause and the homeowners will still have to find a way to pay back the loan, or the house will be foreclosed and auctioned off.