Alternatives to Foreclosure

Some mortgage lenders will consider alternatives to expensive and costly foreclosures, especially if they are unlikely to make a profit foreclosing on your home. You should contact your lender or loan servicing company directly to discuss these potential options. Such alternatives include:

• Repayment Plans : Lenders may agree to help you repay the amount you owe on your loan, plus late fees, by increasing your regular monthly payment and setting a final repayment date. This may be a good option if you are only a few payments behind and can make increased payments now.
• Forbearance Agreements : Lenders may temporarily suspend or reduce your payments; in return, you agree to make a lump sum payment or several partial payments at a later date. This option can help those facing a temporary financial setback like a job loss.
• Loan Modifications or "Work-Out" Agreements : Lenders may agree to modify your existing mortgage to make it more affordable. A lender might reduce your interest rate or principal in order to lower the monthly payment, change a variable interest rate to a fixed rate, or extend the loan's term. Certain eligibility requirements or fees may apply to such modifications.
• "Deed-in-Lieu" or "Short Sale" :A lender can accept title to your home in exchange for canceling the remainder of your debt, or allow you to sell your home and forgive any shortfall between the sale price and the mortgage balance. Such arrangements can help you pay off a mortgage without foreclosure and keep your credit rating relatively intact. However, you do not keep your home under such an arrangement.