Which option allows a borrower to voluntarily transfer title to the lender to avoid foreclosure?

The option that allows a borrower to voluntarily transfer title to the lender in order to avoid foreclosure is the deed in lieu of foreclosure. This process involves the borrower surrendering the property to the lender, which then takes ownership of the property instead of proceeding with a lengthy foreclosure process.

This method can be advantageous for both parties: the borrower avoids the negative impacts of foreclosure on their credit report and the lender typically saves time and money by not having to go through the formal foreclosure process. In many cases, lenders might also agree to forgive any remaining debt after the property is transferred.

The other choices do not involve transferring title. A short sale entails selling the property for less than the amount owed on the mortgage, with the lender's approval, and is typically a more lengthy process. A forbearance agreement is a temporary postponement or reduction of mortgage payments and does not involve transferring title. A loan modification involves changing the terms of the loan—such as the interest rate or repayment schedule—to make the mortgage more affordable for the borrower, again without involving a transfer of ownership.