Alternatives to Foreclosure

Stop foreclosure

When Sellers have difficulty making mortgage payments, they often think that foreclosure is inevitable and their only option.  They don’t know which way to turn and don’t know that they have options. Before resigning to foreclosure, here are some alternatives that might be considered:


  •  Loan Modification – the Lender agrees to amend the existing mortgage i.e. terms, interest rate, as a means to help the Seller avoid foreclosure. 


  • Bankruptcy the Seller liquidates debt
    • Chapter 7 (Liquidation) Settles personal debt.
    • Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts within 3 – 5 years.
    • Chapter 11 (Business Reorganization) A solution for business debt


  • Forbearance – the Lender makes special arrangements with the Seller based on their specific financial situation, which may enable them to handle more affordable payments.  This arrangement could include payment reduction and sometimes even suspension of payments.  The Seller has to prove to the Lender the ability to meet the new payment arrangement.


  • Deed in Lieu of foreclosure – this occurs when the Seller gives the property back to the Bank. It’s not as easy as a Seller just throwing up their hands and saying, “here just take it”.  Banks consider the market condition, rather it is a declining market or not, foreclosure timeline and the condition and expenses associated with the home.


  • Reinstatement – the Seller can pay off the full amount in default, plus fees.


  • Sale – the Seller sells the home without Lender approval. This usually happens if the Seller has equity and assets to be able to cure any deficiencies at closing.


  • Short Sale – a short sale is basically comprised of two main components.  The first is the listing, marketing and selling of the home.  The second involves negotiations between the Seller and their Lender. In some instances this can happen simultaneously. The Seller’s goal is to have their mortgage lender agree to accept the proceeds from the sale of the home as payoff of their balance due.   


Keep in mind, anyone in this position should always consult with an attorney who specializes in this area as well as a tax professional.  If you have questions or would like more information, please visit:

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  1. To get hold of loan modification acceptance, be familiar with the new guidelines and regulations for arranging loan mod in your area and for your particular bank through the aid of a professional who is knowledgeable in submitting successful mortgage loan modification applications. Don’t forget to get all the mandatory paperwork well prepared ahead of submitting the application to your mortgage lender .

  2. I can see that you are an expert at your field! I am launching a website soon, and your information will be very useful for me.. Thanks for all your help and wishing you all the success.

  3. Hey admin, very informative blog post! Pleasee continue this awesome work..

  4. Politics says:

    I truly loved this brilliant article. Please continue this awesome work. Regards, Duyq.

  5. delrin rods says:

    Does anyone think Obama has a plan for this?

  6. I am in the heart of Texas and I’m a San Antonio short sale specialist myself. It is a complete mess over here as well, but short sales do seem to be the best alternative for most to avoid foreclousre. Thanks for posting this, best of luck!

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