24 CFR §203.357

1. (a)Mortgagors owning one property. In lieu of instituting or completing a foreclosure, the mortgagee may acquire property from one other than a corporate mortgagor by voluntary conveyance from the mortgagor who certifies that he does not own any other property subject to a mortgage insured or held by FHA. Conveyance of the property by deed in lieu of foreclosure is approved subject to the following requirements:
   1. (1)The mortgage is in default at the time the deed is executed and delivered;
   2. (2)The credit instrument is cancelled and surrendered to the mortgagor;
   3. (3)The mortgage is satisfied of record as a part of the consideration for such conveyance;
   4. (4)The deed from the mortgagor contains a covenant which warrants against the acts of the grantor and all claiming by, through, or under him and conveys good marketable title;
   5. (5)The mortgagee transfers to the Commissioner good marketable title accompanied by satisfactory title evidence.
2. (b)Corporate mortgagors. A mortgagee may accept a deed in lieu of foreclosure from a corporate mortgagor in compliance with the requirements of paragraph (a) of this section, if the mortgagee obtains the prior written consent of the Commissioner.
3. (c)Mortgagors owning more than one property. The mortgagee may accept a deed in lieu of foreclosure in compliance with the provisions of paragraph (a) of this section, from an individual who owns more than one property which is subject to a mortgage insured or held by the FHA if the mortgagee obtains the prior written consent of the Commissioner.