Yes, we did and it worked out very well for us. Here's what we learned through the process:
1. The bank will ONLY agree to it if you have made a legitimate effort to sell your home. We had our home on the market for two consecutive years, at a reasonable price, three price reductions and no offers. We had to show documentation of all of the above. If you have not done this, this will not be an option for you.
2. We had to show "hardship". For us, I accepted a job in Florida (we were living in NY), meaning that we HAD to move very quickly. Cost of living in FL is much much lower, so my salary would be less, meaning that we could not afford to maintain two households. I had to show documentation of my contract (including start date).
3. The bank collects all of the paperwork (it's the same paperwork as a short sale) and reviews it. IF they still "own" your mortgage (and you would not know if they do or don't), then they decide whether or not they will forward your case to their insurance company. If the bank has sold your mortgage, you will be SOL. If they own it and approve it, they will send it on to the insurance company. It is then up to the mortgage insurance company. If they approve it, then your attorney works with their attorney to draw up the paperwork and you essentially sign over your house and hand over your keys.
The financial impact comes at tax time because the "forgiven debt" will show up as income. The "forgiven debt" is based on the difference between what you "owe" and where the home is "appraised" by the bank. You will pay income tax on that amount.
We asked about the hit to our credit and apparently the huge hits come when you miss mortgage payments. Please continue to pay your mortgage until the paperwork is approved and completed. Our loan officer was incredibly helpful throughout this process because we were upfront with her from day 1. We went to her as soon as I had an offer and explained the situation. She suggested the "Deed In Lieu" and walked us through. Her NUMBER ONE suggestion was to continue paying the mortgage until we signed over the house. THAT is the credit killer... missed payments. We did take a minor hit to our credit, but she let us know that one year of timely payments on our other bills would return the credit to it's original "near perfect" level. If our credit had been poor to start out with, we would have been in trouble.
I will repeat this over and over... if you haven't tried to sell your house, they will NOT entertain this. You can't just "walk away" from your home. This option is for people who have actually TRIED to sell their home and have a legitimate need to request the option.
PS: the bank sold our house at "their price" within three weeks of taking it over. They really only do this if they can still "turn a profit", which they did.