Foreclosure Sign

 Foreclosure is NOT the only option! If you have experienced a hardship and cannot make your payments and you owe more than your home is worth, We can help. We will work with you and your mortgage lender to negotiate the sale of your home. Before entering into  a “Short Sale”  you should learn what options are available to you.

Foreclosure Alternatives

Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction.

  • Loan applications generally ask if the applicant has ever been foreclosed upon.
  • Credit reports also disclose this damaging information.
  • Not the best option.

Payoff/Refinance – Completely paying off the entire loan amount plus any default amount, closing costs and fees.

  • Usually this is accomplished through a refinance of the debt.
  • New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default.
  • With this option, there must be equity in the home. Not easy to obtain this loan.

Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

  • Not feasible or practical.

Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan.

  • This may allow the homeowner to catch up at a more affordable level.
  • To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation.

  • The lender may even be able to provide a temporary payment reduction or suspension of payments.
  • Information will be required from the lender to show that you are able to meet the new payment plan requirements.

Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing.

  • Banks generally require the home be well maintained, all mortgage payments and taxes must be current.
  • Most loan applications ask if this has ever happened.
  • Most banks will not accept this and each state has different laws that may restrict this.

Bankruptcy – This option can liquidate debt and/or allow more time.

  • We can refer you to a qualified bankruptcy attorney.


Chapter 7 (Liquidation) To completely settle personal debt.


Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.


Chapter 11 (Business Reorganization) A business debt solution.


Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid).

  • The homeowner may sell the home without lender approval through a conventional home sale.


Short Sale – also known as a pre-foreclosure sale, if the property has negative equity, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.


The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem

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