1) Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Industry statistics show only 50% of homeowners who are late on their mortgage payments make any attempt to contact their lender. It is wise to make initial contact with your lender. They may offer you solutions you weren’t aware were available to you! Your credit report will disclose a damaging foreclosure rating for at least 7 years. This route is not recommended! You have solutions! Read on.

2) Payoff/Refinance – Completely pay off the entire loan amount. If you’re in pre-foreclosure, you might not have that kind of cash available. Or, you might have an opportunity to refinance the debt through a mortgage loan consolidation. There will be stringent credit requirements and income verification required with this option. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, your home should have some equity in it.

3) Reinstatement – You can reinstate your loan (and bring yourself back in good standing with your lender) by paying the entire amount due plus interest, attorney fees, late fees and past due taxes. Again, this may not be possible if you have already received a notice of default.

4) Loan Modification – Utilize the existing mortgage company to provide a permanent change in the terms of the loan. This may allow the homeowner to catch up at a more affordable level if they qualify.

5) Special Forbearance – Lender may be able to arrange a written repayment agreement to reinstate the loan through a short term repayment plan. A substantial down payment is typically due with this option.

6) Partial Claim – An interest free loan option available on certain FHA loans.

7) Deed in Lieu of Foreclosure – Simply 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.

8) Bankruptcy – This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.
Chapter 7 (Liquidation) To completely settle personal debt.
Chapter 13 (Wage Earner Plan) Regular payments are made toward a plan to pay off debts in 3 – 5 years.
Chapter 11 (Business Reorganization) A business debt solution.

9) Sell Your House – Homeowner may sell the home without lender approval for a conventional home sale. If the property has equity (money left over after all loans and monetary encumbrances are paid), the homeowner will get cash from the sale.

10) Perform a Short Sale If you owe more money on your property than what a buyer is willing to pay for it, you can sell your home in what’s called a short sale, also known as a pre-foreclosure sale. These transactions are negotiated with your lender by your real estate professional. This option has worked successfully on many listings sold by the Five Star Service Team of Re/Max Gold.

11)Take a deep breath... exhale... then give us a call to discuss your options. We are here to listen... provide a little advice... then help you move toward clearing this temporary financial hurdle. No pressure, no commitment ... just straightforward answers to your questions and sound solutions to help you avoid foreclosure.