It's common for homeowners faced with the possibility of losing their home to foreclosure auction to feel stuck with no options to save their home. In our blog, "15 Ways You Can Stop Your Foreclosure," we'll outline proven strategies you can utilize TODAY to avoid foreclosure.

1. Loan Modification

Loan modifications are the first thing I suggest to every homeowner I work with. This process involves adjusting the terms of your mortgage to make payments more manageable, helping you stop foreclosure. By lowering interest rates, extending the loan term, or even reducing the principal balance, loan modification offers a viable solution to avoid foreclosure. Keep in mind that most lenders will not accept applications to modify your mortgage within 37 days of your scheduled auction.  We go into more detail about loan modifications in this blog post – Loan Modifications

2. Forbearance Agreement

A loan forbearance agreement is a temporary relief option that allows you to pause or reduce your mortgage payments for a specific period. During forbearance, you won’t face foreclosure, giving you time to recover financially. Once the forbearance period ends, you can resume regular payments or arrange a repayment plan.  Be aware that some lenders will require unpaid mortgage payments from the forbearance period to be paid in full once the forbearance has ended.

3. Mortgage Reinstatement

Mortgage reinstatement involves paying the total past-due amount, including fees and penalties, to bring your loan current. This one-time payment solution allows you to avoid foreclosure and save your house from being auctioned. Once reinstated, you continue with your regular monthly payments.

Here are a few ways I’ve seen homeowners pull together the funds to reinstate their mortgage:

• Liquidating savings or investments can help you stop foreclosure and keep your home. By accessing funds from savings accounts, stocks, or retirement accounts, you can cover missed mortgage payments and bring your loan current.

• Applying for a personal loan or asking friends and family for a short-term loan can help you reinstate your mortgage. This immediate financial boost allows you to bring your loan current and resume regular payments. Explore personal loan options or reach out to loved ones to secure the funds needed to protect your home.

• Selling non-essential assets can provide the funds needed to stop foreclosure and keep your home. By liquidating items such as jewelry, electronics, or a second vehicle, you can raise the money to cover missed mortgage payments. Evaluate your assets, sell what you don’t need, and use the proceeds to bring your mortgage current. Protect your home by acting quickly.

4. Refinance

If your lender couldn’t help by modifying your mortgage, they won’t be open to refinancing your mortgage either.  Third-party lenders may be able to work with you to obtain a new mortgage with better terms, such as a lower interest rate or extended repayment period, you can reduce monthly payments and make them more manageable. This option allows you to avoid foreclosure and keep your home secure.

Homeowners should be cautious of foreclosure rescue scams. When working with third-party lenders for mortgage refinancing, ensure the company is reputable and avoid offers that seem too good to be true. Scammers prey on those desperate to avoid foreclosure, so verify credentials and read reviews. Protect yourself to save your house from foreclosure by working only with trusted, licensed professionals.

5. Sell Your Home

Selling your home can be a viable solution to stop foreclosure and protect your financial future. By selling, you can pay off the mortgage and avoid the negative impact of foreclosure on your credit. This option helps you avoid foreclosure and may even provide some remaining equity.  Our professionals at Home Prevail can guide you through this process and ensure a seamless transaction.

6. Short Sale

Owe more than your house is worth? A short sale can help you stop foreclosure and avoid financial ruin. By negotiating with your lender to sell the property for less than the outstanding mortgage balance, you can avoid foreclosure and mitigate credit damage. This process helps you save your house from foreclosure and move forward without the burden of unsustainable debt.  The sale process can be longer than usual and it takes a realtor with specialized training in short sales.

7. Deed-in-Lieu

By transferring ownership of your home to the lender, you can stop foreclosure and eliminate your mortgage debt. This option allows you to avoid foreclosure and its impact on your credit. Discussing a deed in lieu with your lender can save your house from foreclosure and provide a fresh start. Essentially, you are signing the deed to your home over to your lender to wipe out your mortgage.

8. Seek Legal Help

An attorney specializing in foreclosure can review your case, identify defenses, and negotiate with your lender. Legal guidance ensures you understand your rights and options, helping you avoid foreclosure and save your house.  If your lender is not cooperating or acting in bad faith, an attorney can help you file a complaint with regulatory agencies, ensuring your rights are protected. This action can halt foreclosure proceedings and pressure the lender to negotiate fairly.

9. File Bankruptcy

Bankruptcy triggers an automatic stay, temporarily halting foreclosure proceedings. This allows you time to reorganize your finances and create a repayment plan under Chapter 13, or discharge certain debts under Chapter 7. Consult a bankruptcy attorney to understand how filing can help you avoid foreclosure and save your house.  I'm not affiliated with UpSolve.org but I always refer homeowners to their page as a great source of information and free bankruptcy assistance!

10. Mortgage Reinstatement Assistance Programs

Apply for federal and state mortgage reinstatement assistance programs to stop foreclosure and keep your home. These programs provide financial aid to cover missed payments and bring your mortgage current. By utilizing these resources, you can avoid foreclosure and save your house from being auctioned.  

11. Hardship Letter

To stop foreclosure and save your house, homeowners can send a hardship letter to their lender, detailing financial struggles and requesting alternatives to auction. Include specific reasons like job loss, medical bills, or divorce. Offer solutions like loan modification or repayment plans. Timely communication is crucial to avoid foreclosure and find a viable solution. Not sure what to write in your letter? Check out some examples and templates HERE.

12. Loan Assumption

Homeowners facing foreclosure can explore mortgage assumption as a way to avoid losing their home. Find a qualified buyer willing to assume your existing mortgage terms and conditions. Contact your lender to check if your mortgage is assumable and what steps are needed. Ensure the new buyer qualifies financially and meets the lender's criteria. This option can save your house from foreclosure and provide relief from financial stress.

13. Partial Claim

Homeowners with insured mortgages can file for a partial claim to halt foreclosure proceedings. This option allows you to receive a one-time zero interest payment from your mortgage insurer to bring your loan current. Contact your lender or mortgage servicer to apply for a partial claim and discuss eligibility criteria. Provide necessary documentation such as proof of hardship and financial statements. Acting promptly can help save your house from foreclosure and provide a path to financial stability.

14. Reverse Mortgage

Homeowners facing foreclosure can consider applying for a reverse mortgage to save their house. This option allows seniors aged 62 and older to convert home equity into cash without selling. Use the funds to pay off the existing mortgage and avoid foreclosure. Consult with a HUD-approved reverse mortgage counselor to understand eligibility and obligations. Reverse mortgages can provide financial relief and help stop foreclosure proceedings, ensuring you keep ownership of your home.

15. Employer Assistance Programs

Homeowners facing foreclosure can explore employer assistance programs as a potential lifeline. Many companies offer financial aid or loans to help employees during hardships like impending foreclosure. Contact your HR department or benefits manager to inquire about available assistance programs. Provide documentation of your financial situation and explain your need to avoid foreclosure. Employer assistance can provide crucial support in saving your house and stabilizing your finances.

Final Words

Don't bury your head in the sand and hope this goes away on it's own. Remember, homeowners can take action action by exploring alternatives to foreclosure. It’s critical to act quickly and seek help early to increase your chances of finding a solution. Resources and support are available to help you navigate these challenges and protect your home.

Our experts at Home Prevail can assist you through the process to ensure you're exhausting all of your resources to avoid foreclosure. Contact us TODAY for immediate assistance