Forbearance, short selling and other options


Insider’s experts choose the best products and services to help you make informed decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.

  • If you’re facing a potential foreclosure, the most important thing you can do is talk to your lender.
  • There are several options for avoiding a foreclosure, including those that allow you to stay in your home.
  • If you need help navigating your loss mitigation options, you can speak with a HUD-certified housing counselor for free.

Going into foreclosure means losing your home, taking a big credit hit, and not being able to get another mortgage for years. But just because you missed some mortgage payments doesn’t mean foreclosure is inevitable.

If you are facing a foreclosure, you have options to end it.

What is foreclosure?

Foreclosure is the process used by a mortgage lender or manager to take possession of a home when a borrower stops making payments. When a house is seized, it is sold at auction.

Lenders will typically initiate foreclosure proceedings between three and six months after your first missed payment, depending on the US Department of Housing and Urban Development.

Once the foreclosure process is complete and your home has been sold, you will be forced to vacate the property and your credit will take a huge hit – if you have a good credit score, a foreclosure could take it down 100 points or Suite.

Speak to your lender as soon as possible

The most important thing you can do if you face a possible foreclosure is to keep the lines of communication open with your lender.

“The first thing you need to know to avoid foreclosure is that you should let your lender know as soon as you run into financial difficulties that could cause you to miss payments,” says Andrew Latham, CFP and editor of “If you can’t make your mortgage payments, ask what options are available to you.”

Lenders are usually willing to work with a borrower who is unable to meet their payments, as it is often cheaper than going through the foreclosure process.

Options to prevent typing

If you’re unable to make your monthly mortgage payments, you have a few options that can prevent you from losing your home to foreclosure and taking a toll on your credit.

Some of the options listed here let you stay in your home, while others require you to sell or give up your home.

Which of these options is right for you depends on the nature of your situation. If you are experiencing a temporary financial setback, forbearance or a repayment plan for your missed payments might be the best route. If your situation is more permanent, you could apply for a loan modification.


Forbearance temporarily stops or reduces your monthly payments when you encounter short-term financial difficulties. It could be job loss, natural disaster or illness.

Pausing your mortgage payments temporarily can give you time to find a new source of income or get back on your feet financially.

You’ll work with your lender to determine the terms of forbearance, including how much your payments will be reduced and for how long.

After your forbearance period ends, you will need to repay any payments you missed. You have several options to proceed:

  • Have the amount you owe added to your next mortgage paymentsspreading the repayment over several months.
  • Have your missed payments added to the end of your mortgage. This is called deferral.
  • Pay the amount in one installment. Lenders usually can’t ask you to pay the amount you committed while you were forbearing all at once, but that’s an option.

Repayment plan

A repayment plan can help get you back on track if you’ve missed a few mortgage payments but are now able to afford your regular monthly payment.

You’ll work with your lender to create a repayment plan that’s right for you. The amount you owe will be spread over a set number of months and added to your monthly payments.

Loan modification

If you are having longer-term difficulties and are no longer able to pay your regular mortgage payments, ask your lender to modify your loan.

A loan modification changes the terms of your original mortgage to make it more affordable. This could include extending the term of your loan or lowering your interest rate.

Refinance your mortgage

If you haven’t missed a mortgage payment yet, but think you’ll have trouble in the near future, you might want to check if refinancing could lower your monthly payment.

Mortgage rates are relatively high right now, but if you refinance for a longer term, you could always reduce your payment enough to bring it down to a more affordable level. Keep in mind, however, that refinancing comes with closing costs.

Sell ​​your house

If you don’t qualify for any of the loss mitigation options that allow you to keep your home, selling your home on your own terms, rather than selling it at a foreclosure auction, might be your best bet.

Work with a real estate agent to determine the price at which you could likely sell your home. If the value of your home exceeds the amount you owe on your mortgage, you should be able to pay off your mortgage in full when you sell. You may even have money left over to help you find a new place to live.

Flash sale

If the proceeds from the sale of your home do not cover the total amount you owe on your mortgage, you can ask your lender if you qualify for a short sale.

With a short sale, the proceeds from the sale of the home are not enough to pay off the entire mortgage, so the lender agrees to accept less than the full balance and forgives the remaining amount.

You may even qualify for relocation assistance from the lender with this option.

Deed in lieu of foreclosure

If you are unable to sell your home, you may qualify for a deed in lieu of foreclosure.

With this option, you will give ownership of your home to the lender and, in exchange, the lender will release you from your obligation to pay the mortgage.

Similar to a short sale, you may be able to obtain relocation assistance through your lender with a Deed in Lieu of Foreclosure.

Where to Get Foreclosure Help

HUD-sponsored housing counseling agencies offer free advice on how to navigate a possible foreclosure. You can search online for an advisor near you. You can also call the HOPE Helpline at (888) 995-4673 to connect with a HUD-approved counselor.

Foreclosure lawyers can also help you if your situation is more complex or if you need help understanding your options.

But beware of scams. Many scammers take advantage of homeowners facing foreclosure, so be careful who you turn to for help.

Remember, foreclosure prevention tips from HUD-approved agencies are available free of charge. Avoid unscrupulous companies that offer to help you get a loan modification or ask you to sign your deed to them.

When is it too late to stop a seizure?

“Your last chance to avoid foreclosure will depend on where you live, as foreclosure law varies by state,” Latham says. “In California, for example, you have up to five days before the sale of your property to remedy the defect and stop the foreclosure.”

Research to see if your state has any guidance or educational resources about its foreclosure laws and how homeowners can end foreclosure proceedings. Your state attorney general’s office may have this information.

Depending on your state’s laws, you may have until the auction date to stop a foreclosure. But the longer you wait, the harder it gets. This is why it is essential to inform your lender as soon as you anticipate a missed payment.


Comments are closed.