Home owners who are facing foreclosure often dread dealing with the facts that got them to that place. If they think back to when they first bought that home, losing the home was probably the furthest thing from their mind. Few home owners actually plan to go into foreclosure. Avoiding foreclosure means that you have to take resolute action.
Contact Lender
The first thing you can do to prevent foreclosure is, very simply, communicate. Communicate early and often with your lender until you are current on your payments. Lenders are people, too, and if you are honest with them about why you are late on your mortgage payment they by all means want to work with you to resolve the situation.
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Forbearance
If a temporary hardship has caused you to get behind on your loan payments, forbearance may allow you to keep your home by providing you with a solution until the situation improves. The goal of mortgage loan forbearance is to help you get your home loan payments reduced or suspended (typically for up to 90 days) if you're suffering from a temporary financial hardship.
Loan Modification
To get a loan modification you generally have to ask. Call the bank and let them know about your financial situation. Just be honest and explain whether or not you'll be able to make your payments. If they agree, you may qualify for a loan modification. Loan Modifications are changes to your loan agreement. Your payments get more affordable, and you don't have to default on your loan. Banks choose to offer loan modification programs because it is easier to work with you than to go after you. Banks have different criteria, so there is no way to know ahead of time if you'll qualify for loan modification - you just have to ask.
Short Refinance
A "short refinance" is a transaction in which the lender agrees to refinance the borrower's home for the current market value, in effect making it more cost effective for the borrower. The lender agrees to replace the lenders current loan with a new one and pays off the difference. This new loan typically has a lower balance and borrowers typically receive a new interest rate, which is often lower than their former one - resulting in a reduced mortgage payment. A short refinance takes place when the borrowers loan balance is more than the property's worth. This is often attributable to declining markets, such as in the recession of 2009, which stressed the financial system's ability to supply mortgage credit, subsequently limiting the ability of Americans to refinance mortgages and buy homes
Deed-in-Lieu of Foreclosure
This is called deeding the home back to the lender. The homeowner gives the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Basically the homeowner is giving the house to the bank.
Bankruptcy
Bankruptcy allows you to stop foreclosure in even the most extreme situations and aids in you in exercising your legal rights. But this legal protection only allows you to stabilize your financial situation for a while and only protects you until you recover from the ongoing financial crisis. As soon as you come out of your present critical situation you have to return your pending liabilities. Prior to filing any bankruptcy petition, you should consult your legal advisor or lawyer.
Short sale
Even if the lender files a NOD and you get an offer from a buyer, the lender should respect the fact that you have a buyer. The lender may try to resell your home even if they foreclosed your home. But if you come up with an appropriate short sale offer, the lender may see it as an efficient, easy and relaxed way of resolving the issue
Strategic Default
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