Skip to main content
Find a Lawyer
Please enter a legal issue and/or a location
Begin typing to search, use arrow keys to navigate, use enter to select

Alternatives to Foreclosure

Homeownership is a source of pride for many Americans. Changes in the real estate market and mortgage financing have made buying a home easier. In many ways the process of buying a home has gotten simpler, but it's not necessarily the case that the process has become easier to pay for. Home loans are secured by the property itself. This means that if you fail to repay the borrowed money, your lender can take your house.

Foreclosure is the legal means that your lender can use to repossess your home. The foreclosure process is stressful., but there are ways to prevent foreclosure. Such ways include loan modifications, which are adjustments to your mortgage agreement. 

If you are facing financial difficulty and fear that your homeownership may be put in jeopardy, you don't need to give up. There are a number of ways that you can try to keep your home. Depending on your circumstances, you might be able to work things out with the lender. This will allow you to limit your losses or avoid damage to your credit score.

Below are a few alternatives to foreclosure. You'll need to talk to your lender to see if you qualify for any of these plans to avoid foreclosure. As a borrower, you don't want a foreclosure on your record. It can make borrowing impossible in the future.

Special Forbearance

You and your lender may be able to negotiate a repayment plan that accommodates your financial situation. This repayment plan might provide for a temporary reduction of your payments or even result in a temporary suspension. 

You may qualify for this if you have recently experienced a reduction in your income. You might also qualify for this if you experienced an increase in your living expenses. You must furnish information to your lender to demonstrate that you can meet the requirements of the new payment plan.

Mortgage Modification

You may be able to refinance the debt. You might also even be able to extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to an amount you can afford. You may qualify if you have recovered from a financial problem, while at the same time being able to afford the new payment amount in light of your improved financial circumstances.

Partial Claim Through Mutual Mortgage Insurance Fund

If you default and your lender loses money in a foreclosure sale of the home, the lender may be able to recover their lost money. They may be able to do so through the Federal Housing Administration (FHA) Insurance fund. This fund is also known as the Mutual Mortgage Insurance (MMI) fund. Maintained by the FHA, this fund will pay the lender the amount lost during the foreclosure sale.


You might be able to refinance your home. In this case, you could negotiate lower payments and/or a lower interest rate.

Whatever option you choose of the above, it's important to know that you don't need to be subject to a short sale or execute a deed-in-lieu of foreclosure. 

In the first scenario, with a short sale, you avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan. In the second situation, with a deed-in-lieu of foreclosure, you're entertaining a last resort-type solution. With such a deed, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it is not as damaging to your credit rating as a foreclosure.

How Do I Know if I Qualify for These Alternatives?

Your lender will determine if you qualify for any of the alternatives to foreclosure. A housing counseling agency can also help you determine which, if any, of these options may meet your needs. They can also assist you in interacting with your lender.

Still Need Help?

If you can't make your mortgage payments and are afraid your home may end up in foreclosure, it may be helpful to speak with a foreclosure attorney about your rights and options. They can inform you of your jurisdiction's protections for homeowners. They can also discuss the merits of your options and assist in negotiations with the lender. Contact a local real estate attorney or realtor to learn more about how they can help with loss mitigation and protection.

Housing counselor services can also provide valuable insights into loan balance, interest rates, and liens that may be affecting your financial situation. Additionally, they can help you understand HUD and loss mitigation programs. They can provide legal advice, as well.

Remember that this information is for informational purposes only and is not legal advice. It's important to work with an attorney if you're facing legal problems. They can always help you in getting accurate information on eviction, reinstatement, and missed payment processes. 

There are many ways to keep your home. You don't always need to deal with foreclosure, even when you think you might. A foreclosure sale is not always necessary. Neither are the other foreclosure processes. Contact a local real estate attorney if you need more help.

Was this helpful?

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

Or contact an attorney near you:

Next Steps

Contact a qualified real estate attorney to help you avoid or navigate the foreclosure process.

Begin typing to search, use arrow keys to navigate, use enter to select

Help Me Find a Do-It-Yourself Solution

Copied to clipboard

Find a Lawyer

More Options