Possible Alternatives To Foreclosure
Sometimes, a lender may not pursue foreclosure even though your loan payments are behind. Although a lender isn't required to accept any offers or renegotiate the terms of your loan, there may be alternatives to foreclosure.
Possible Alternatives
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Special 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. A repayment plan may be a good option when the situation that caused your default is resolved. For example, the default may have occurred because you were unemployed for a period of time, but you have now become employed again. -
Mortgage Modification
You may be able to refinance the debt and extend the term of your mortgage loan. This will help you catch up by possibly reducing the monthly payments to a more affordable level. You may qualify if you've recovered from a financial problem but your net income is less than it was before the default. -
Partial Claim
Your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current, if you qualify. -
Pre-Foreclosure Sale
This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. If you're unable to afford the house long-term, you may sell the house yourself before the foreclosure sale and save some of your equity. -
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.
How Do I Know If I Qualify For Any Of These Alternatives?
Free foreclosure counseling is available via funding from the State of Washington. Talk to a counselor who will be able to help you determine if any of these alternatives are right for you.
Contact the Washington State Homeownership Information Hotline at 1.877.894.HOME (1.877.894.4663) or visit www.homeownership.wa.gov for a list of counselors in your area.
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