My daughter and her husband have filled out the paperwork to sponsor me to become a permanent resident of Canada. I'm a U.S. citizen. I understand it takes about two years, so we have about 1.5 years to go. I have good credit and everything, but it looks like I may have to do a deed in lieu of foreclosure since I have not been able to sell my home. If I cannot sell the house and have to do this, will this bad mark on my credit affect whether I am approved as a permanent resident of Canada?

No, your credit is not checked by the government of Canada, your sponsor (daughter in this case) will / has signed forms indicating she will support you financially for a certain period usually 6 months or a year.

Thank you so much Lowtax!