The Doctrine of Merger of Title and Deeds in Lieu of Foreclosure

The mortgage crisis has brought with it a record number of foreclosures.  Not surprisingly, deeds in lieu of foreclosure have also become much more common.  Generally, the doctrine of merger of title holds that when a greater and lesser estate coincide and meet in the same person, the lesser estate is merged with the greater. The question then becomes, does the deed in lieu have the effect of extinguishing the lender's mortgage lien?  The short answer is "maybe."