2. Although I have personally seen this type of "Deed in Lieu of Foreclosure" agreement (as a Notary Public), I agree wholeheartedly with the other responders that this is a LEGAL question which your attorney needs to answer. If you don't trust your attorney get a second opinion in your local area from an attorney who practices in the County (and State) in which the property is situated. Every legal municipality has its own rules, standards of practice, and laws.
3. If you have a DSS lien and are under threat of foreclosure/legal action, you also need to locate another place to live. There are multiple companies in the Rochester NY who specialize in "low income housing" (keywords to add to your desired residence location in an internet search engine.)
4. Good luck!
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors