Steps to Avoid Foreclosure

The following options may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure: 

If your problem is temporary, you may want to consider the following options:

• Reinstatement - Your lender may be willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance may accompany this option.
• Forbearance - Your lender may be able to temporarily reduce or suspend your payments for a fixed period of time. At the end of that time, you must make a lump sum payment or enter into a long term repayment plan to pay back the reduced or suspended amount. Forbearance may be a good option when the cause of your default is specific and temporary and it is reasonable to assume you will be able to resume making payments at the end of the forbearance period.
• Repayment Plan - Your lender may be able to arrange a simple repayment plan whereby you make your mortgage payment plus an amount of the total in default. The plan could be a few months long, or may extend to a year. At the end of the time period, you would have paid off the past due amount and your payments go back to the original payment amount. Your lender or servicer may require a good faith payment upfront to begin the plan.

If your problem appears to be long-term or will permanently affect your ability to bring your account current, you may want to consider the following options:

• Mortgage Modification – If you can make payments on your loan, but don’t have enough money to bring your account current or you can’t afford your current payment, your lender (We) may be able to change the terms of your original loan to make the payments more affordable.  Your loan could be permanently changed in one or more of the following ways:
  • Adding the missed payments to the existing loan balance
  • Changing the interest rate, including making an adjustable rate into a fixed rate.
  • Extending the number of years you have to repay.    
• Partial Claim – If your mortgage is insured and you qualify, your lender may be able to help you get a one-time, interest-free loan from your mortgage guarantor to bring your account current.  You may be allowed to wait several years before repaying this loan.   

If keeping your home is not an option, you may want to consider the following options:

• Sale - If you can no longer afford your home, your lender will usually give you a specific amount of time to find a purchaser and pay off the total amount owed. You may be expected to use the services of a real estate professional who can aggressively market the property.
• Pre-Foreclosure Sale or Short Sale - If you can't sell the property for the full amount of the loan and you qualify, your lender may accept less than the amount owed. Financial help may also be available to pay other lien holders and/or help towards some moving costs.
• Assumption - A qualified buyer may be allowed to take over your mortgage, even if your original loan documents state that it is non-assumable.
• Deed-in-lieu of foreclosure - As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but may help your chances of getting another mortgage loan in the future.

Regardless of which option you choose, it is important to note that for the majority of these alternatives to begin, you will need to collect the following documents in order to work with a HUD-certified counseling agency. 

1. 2 Most recent pay stubs
2. 2 most recent bank statements
3. 2 most recent IRS Tax Returns (W2’s & 1040’s)
4. Financial Statements
5. Recent mortgage statement (mortgage payment notice/coupons) of each loan.
6. A “Hardship Letter” describing in your own words the reasons you are unable to pay your mortgage.

To find a HUD-certified counseling agency in your area, please contact HUD at (800) 569-4287.

For more information in regards to available alternatives, contact SAS at:

(866) 919-1SAS or email info@reosas.com