Foreclosure Prevention Options

Most mortgage lenders will have options to offer to prevent foreclosure. Working with a NeighborWorks® (NHS) counselor will help you be ready to discuss available options.

But, before workout options can be considered, you will need to gather and provide all the documents on our Document Checklist. These help your counselor understand the details of your situation and guide you toward the best solution.

Once your lender has reviewed your documentation and offers you a workout plan, your counselor can review the documents with you to help you fully understand if it is a solution that will help you or not.

AdobeStock 293861510

Temporary Financial Difficulty

You may have temporary financial trouble due to being out of work due to Short-Term Disability, a need to take advantage of Family Leave Act, or another reason your financial situation has changed for a temporary time. If this is the case, these are some of the workout options your lender may offer:

  • Reinstatement: If you are behind in your payments, lenders are generally willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance may accompany this option.
  • Forbearance: Your lender may allow you to reduce or suspend payments for a short period of time with an agreement to another option to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time.
  • Repayment Plan: Your lender may offer an agreement to resume making your regular monthly payments along with a portion of the past due payments until you are caught up.

Permanent or Long-Term Financial Difficulty

If it appears that your situation is long-term and you will be unable to afford your mortgage payments as they are or are unable to bring your account current, these are some available options:

  • Mortgage Modification: If you are able to make monthly loan payments, but don’t have enough money to bring your account current or you can’t afford your current monthly payment, discuss with your lender the option to change the terms of your original loan to make the payments more affordable. If you do this, your loan could be permanently changed in one or more of the following ways:
    • Missed payments may be added to the existing loan balance
    • A reduced interest rate, including converting an adjustable rate to a fixed rate
    • Extending the number of loan repayment years
    • A reduced principal balance
  • Short Sale: If you can no longer afford your home and the lender will not agree to modify your mortgage in a way that makes payments affordable, you may need to sell your house. If you cannot sell it for the full amount of your mortgage loan, you can request that the lender accept less than the amount owed. You MUST get the lender to agree to this before selling your house. You cannot sell the house and expect the lender to accept whatever money you get for the house if it is less than what you owe.
  • Deed In Lieu of Foreclosure: If you are unable to sell your house and cannot afford the mortgage payments, you can attempt to “give back” your house to the lender in exchange for the lender forgiving your debt. This will not keep you in your house, but it is less damaging to your credit rating than foreclosure. The lender must agree to this.

GET HELP—It All Starts Here

Completely fill out this form BEFORE your counseling appointment so we may assist you in the best and quickest way possible.