Alternatives to Foreclosure

If you’re behind or concerned about making your mortgage payment we encourage you to call and speak to a counselor who can assist you with your lender to determine your options. Even though the thought of foreclosure is scary, stressful, and overwhelming, the best thing to do is be proactive and talk with a counselor and lender to learn your options.

Your mortgage servicer might offer the following options as an alternative to foreclosure:

  • Forbearance: This option temporarily suspends payments, allowing you time to make up the shortfall. If an agreement is reached and you are able to meet its terms, the lender should not take foreclosure action against you.
  • Repayment Plan: A servicer might be willing to spread the owed amount over several future payments until the loan is caught up.
  • Loan Modification: A servicer might be able to modify your existing loan to allow you a more manageable monthly payment. Although this may increase the loan amount over the life of the loan, the monthly payments would be more affordable.
  • Refinance: If there is sufficient equity remaining in the property, a servicer might consider refinancing your loan. In this instance, missed payments would be calculated into the new loan balance.
  • Partial Claim: If you have an FHA loan and meet HUD’s guidelines, you may be eligible for a Partial Claim, which is an interest-free loan designed to help homeowners reinstate a delinquent loan. This would be an additional loan to your original mortgage, and would be paid back either after the original mortgage is paid off or the property is sold.
  • Forgiving a Payment: Although extremely rare, a servicer may sometimes forgive a missing payment provided you agree to then remain current on your mortgage from that point on. This option is extremely unlikely, but does occur.

Should you be unable to remain in your home, your mortgage servicer might consider these alternatives:

  • Short Sale: A servicer might be willing to sell the home for less than the balance due on the loan.
  • Deed in Lieu: This option gives the property rights of the home back to the servicer.  It has a less negative effect on your credit score and may include borrower relocation assistance.

Our HUD-certified counselors can help you better understand your financial condition and weigh your options. They are available around the clock every day, providing counseling to homeowners like you in more than 200 languages.