There are several ways in which you may be able to stop foreclosure, but it is important that you take action before the foreclosure proceedings begin. Even though it is still possible to stop a foreclosure while it is underway, it will likely be much more difficult than stopping it beforehand. Some options for stopping foreclosure once it is underway include selling your home in a short sale or signing a deed in lieu of foreclosure. In addition to these methods, you might also want to consider working out a repayment plan or refinancing your home if it appears the foreclosure is inevitable.
A short sale might be a good way to stop foreclosure if you owe more money on your home than it is worth. With a short sale, you can check with your lender to see if they will accept an offer made on your home that is less than the total amount you owe. If the lender agrees to the short sale, you can sell your home for that amount and any remaining balance will typically be forgiven by your lender. The primary disadvantage to a short sale is that it is still likely to negatively affect your credit, but in most cases it does not look as bad on your credit as a foreclosure. Keep in mind that depending on where you live, the debt forgiven could be considered income and you may be liable for taxes on the amount.
Another way to stop foreclosure is by signing a deed in lieu of foreclosure. To do this, you would need to create a deed and have it notarized, effectively giving your home back to the lender, who might then forgive the debt. There is no guarantee that the lender will agree to this, and if the lender does agree to it, a deed in lieu of foreclosure will likely look just as bad on your credit as a foreclosure.
If the foreclosure process on your home has not yet begun, you should contact your lender immediately to discuss ways in which you may be able to prevent it. In most cases, lenders want to stop foreclosure just as much as you do because they may not actually want to take possession of your home. Foreclosures can be expensive and inconvenient not only for you, but also for your lender. Many people avoid discussing impending foreclosures with their lenders because they are embarrassed about the situation or fearful that it won't do any good, only to be surprised by how willing their lenders are to help them stop foreclosure.
Your lender may do many things to help you stop foreclosure on your home, including working out a repayment plan or possibly refinancing your home. In addition to these things, your lender might also forgive some past due payments or give you extra time to catch up on your payments. A loan modifications is another option that might be presented to you. With a loan modification, you make some trial payments to show your lender that you can afford your home; after you've proven that, you might be given a lower monthly payment in addition to a reduced interest rate. Whether you are currently in the process of foreclosure or foreclosure is impending, you should take the opportunity to discuss options with your lender to find out what would work best for your individual situation.
