When is it Too Late to Stop Foreclosure

When is it Too Late to Stop Foreclosure?

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Financial catastrophes often leave people feeling distraught, agitated, angry, and depressed. Foreclosure is one of the worst because it means the potential loss of your home. A lot of homeowners, when they face this situation, are in shock, denial, or just plain afraid, and they often hide from the issue, when what is needed is immediate action.

If you’re currently facing foreclosure, get with your mortgage lender immediately to discuss options. Foreclosure happens when you fall behind in monthly payments and default on the loan. The lender or bank then has the right to foreclose or seize the property to sell it to recover their money.

Most lenders understand financial hardship, and if you talk with them, arrangements can be made to delay proceedings. However, if you ignore the situation and don’t speak with your lender, and you wait till the last minute to stop a foreclosure, you limit your options and the only ones left are more severe.

But at what point is it too late to stop foreclosure? When is it too late for you to do anything to save your house, and you should sell instead of keep trying?

How the Foreclosure Process Works

The home foreclosure process varies by state and lender. Every state allows judicial foreclosure, so proceedings take place in the court system, but take several months, sometimes even years, to complete.

Nonjudicial foreclosure (or Power of Sale) is available in some states and does not go through the court. Rather the lender handles the proceedings over a course of 60 to 90 days.

Step-by-Step Foreclosure Process

Step 1: You miss payments. After 3 months of missed payments, the lender issues you a Demand Letter or Notice to Accelerate, giving you 30 days to bring your loan current. That period of 30 days is known as pre-foreclosure, and if you fail to pay, the lender begins official proceedings.

Step 2: Foreclosure proceedings begin. The lender’s attorney files Notice of Default with the foreclosure court, and you have 20 to 30 days to respond.

Step 3: Notice of Sale is issued, and the foreclosure sale is scheduled.

Step 4: Foreclosure auction. The property is sold to the highest bidder, and you are served with an eviction notice. You may also be charged with a deficiency judgment to reimburse the outstanding balance that remains post sale.

Redemption Period

Some states give you a chance to reclaim your house after the public auction. This redemption period is temporary and depends on your state and whether foreclosure is judicial or nonjudicial. If you hope to redeem your property, you’ll have to pay the mortgage, all late fees and foreclosure costs.

Honestly though, the date of auction, and the moment the house is sold with the court’s approval is when it’s too late to stop foreclosure because it’s a done deal. You should research the legal process and speak with a foreclosure attorney to better understand your options before the date of sale.

how to stop foreclosure calculating debt to save house How to Stop Foreclosure Proceedings

Anyone who knows they’re going to miss a payment should speak to their lender right away to discuss options. BUT in the event a homeowner does not take immediate action, and they wait till proceedings start, there are still ways to bring things to a halt.

File Bankruptcy

Declaring bankruptcy is a legal process by which you seek relief for your accumulated debts. There are two types of bankruptcy that a homeowner can file in this situation:

  • Chapter 7 Bankruptcy – sells assets to pay off debts
  • Chapter 13 Bankruptcy – restructures debt into a repayment plan

Both chapters issue an “automatic stay”, prohibiting creditors from pursuing collection efforts till the stay is lifted.

Chapter 7 lasts only a few months, while Chapter 13 can last 3 to 5 years. Between the two, Chapter 13 is the better option, if you want to save your home and need more time paying down your financial situation.

Bankruptcy is a difficult, costly process and has its consequences, including:

  • Severe damage to your credit score
  • A derogatory mark on your credit report for 7 years
  • Does not discharge all forms of debt
  • Securing new loans or refinancing will be nearly impossible for 7 years
  • Obtaining new credit cards will be difficult after the fact
  • High deposits and high rates on new utilities, including phone plans
  • Loss of job opportunities that require credit verification
  • You’re responsible for the filing fee ($300+)

Its advantages, however, include:

  • Delaying foreclosure temporarily, up to the date of sale
  • Strips second and third mortgages
  • Discharges non-priority, unsecured debts
  • Stops eviction

Bankruptcy laws vary by state, so you may want to speak with a bankruptcy attorney to better understand your options before filing.

Loan Modification

A loan modification is a change to the existing terms of your mortgage. The change can be an interest rate reduction, time extended for repayment, a different loan type, or a combination of all three. Your hopeful outcome is a lower monthly payment.

This option does not always work and has disadvantages:

  • Lower monthly payment, BUT you’ll owe more money overall if term is extended
  • New amount due may be more than the property is worth
  • Processing and legal fees, late fees and back taxes are added on
  • Any principal portion the lender writes off is taxable income
  • Your credit score takes a hit if the lender reports the modification as a “debt settlement”

File a Lawsuit

If it’s nonjudicial, you can file a lawsuit against the lender. Also called mortgage litigation, you can claim one of the following scenarios:

  • Mortgage terms are unfair
  • Trustee failed to follow state procedure
  • Lender made an error
  • Bank cannot provide documentation proving they own the mortgage

Understand, you will lose money in legal fees, and you’ll need the right attorney to help prove your version of events to the court. Most cases never even make it to trial.

Deed in Lieu of Foreclosure Deed in Lieu of Foreclosure

If you want to walk away from the problem entirely, you can always transfer the deed to the property to the lender. To put it simply, you’ll forfeit your claim to the house and surrender your equity in it in exchange for mortgage relief.

The only time to consider a deed in lieu is at the very last minute, after you’ve exhausted all possible alternatives. It’ll still leave a negative mark in your credit report, and you may have to pay taxes on the forgiven debt.

Sell the House

Selling may seem extreme but often it’s the best way to avoid your situation. How you sell depends on how much time is left before the auction date. Chances are, you’ll want to sell to a cash buyer who can purchase quickly, with no lender approval delays. By selling to a cash buyer, who oftentimes is a real estate investor, you can pay back the mortgage company, avoid having foreclosure in your credit report, and be free and clear of the issue. 

Sometimes the only way to do this is through a short sale, which is more common during a Buyer’s Market and underwater situations, when your mortgage is actually more than your house’s current market value.

A short sale is when a borrower sells their mortgaged property for less than what they owe the lender. The lender must agree to and approve the sale. Any proceeds left over you can either pocket or use to settle other debts.

So there’s no misunderstanding, short selling still hurts your credit but is easier to recover from than the alternative. A short sale stays on your record for a period of 2 years, while foreclosure stays with you for up to 7 years and causes a significant decrease in points. Plus you may have to pay taxes for the forgiven amount.

How to Sell a House in 7 Days

A home foreclosed by a lending institution is too late to save once it sells at auction. Lenders often prefer not to proceed with a foreclosed property because it costs them money. So a pitch to sell might bring things to a temporary halt.

At SolidOffers, we know trusted investors who can pay cash for a property “as-is” – no repairs or renovations necessary. They have experience in speaking with lenders and sometimes have their attorney negotiate the situation. Oftentimes, investors will also cover closing costs and additional lender fees, clearing you of any foreclosure or house loan related debt. Better still, because they can prove to have the available funds in hand, mortgage servicers are willing to give more time, and many investors can close in 7 days.

What has been stated in this article does not constitute legal advice. Real estate law and foreclosure law differs between states, and we recommend you get advice from a foreclosure attorney or bankruptcy lawyer or other professional to determine your best option to avoid foreclosure.

Does Bankruptcy stop foreclosure

Does Bankruptcy Stop Foreclosure?

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No one wants to lose their house, but when you fall behind on your mortgage payments, and therefore default on your loan, the lender has the right to foreclose the mortgaged property to recover their money.

Filing bankruptcy is one option that stops foreclosure at the last minute, but it’s not necessarily the best option. Bankruptcy is a grueling, tedious process that costs money and has its own set of consequences, and if it does not pan out well, you can still find yourself facing foreclosure. BUT if all goes well, you’ll find some debt relief and (hopefully) bring your loan balance current, and thus keep your house.

So, can bankruptcy stop foreclosure? Yes, if it’s done right, and the house isn’t sold yet, filing for bankruptcy can stop (or at least delay) foreclosure and help you save your home.

What is Bankruptcy?

Bankruptcy is a legal process through which people who cannot repay their debts seek debt relief. Relief does not necessarily mean those debts are canceled. Instead, the debtor’s assets are measured and sold to repay a portion of the outstanding debts, OR a repayment plan is put in place, so the debtor can pay back what they owe overtime.

The bankruptcy process starts when you file a petition. Depending on what type of bankruptcy you file – Chapter 7 or Chapter 13 bankruptcy being the most common to prevent foreclosure, an “automatic stay” is granted, so creditors cannot pursue collection efforts against you. The automatic stay also puts a stop to foreclosure proceedings.

You’re assigned a bankruptcy case number and then a bankruptcy trustee. The trustee represents your estate and is responsible for ensuring that all collectors get paid, whether it’s with cash from selling off your assets or via a repayment plan.

What is Chapter 7 Bankruptcy?

Chapter 7 (or liquidation bankruptcy) liquidates nonexempt assets to pay past due payments over a course of 3 to 4 months. Assets that are not exempt from the bankruptcy process include the following:

  • Stocks and bonds
  • Second properties
  • Second vehicles
  • Watercraft
  • Heirlooms and antiques
  • Jewelry (beyond a specified value)

Property or assets that are exempt from the process include:

  • Furniture
  • Appliances
  • Clothing
  • Pensions
  • Social Security
  • Unemployment Benefits
  • A portion of unpaid earned wages

Is my House Exempt from Chapter 7 Bankruptcy?

Depending on how much equity you have in it, your primary residence could be exempt from the Chapter 7 bankruptcy filing. You’ll have to discuss it over with the trustee.

What is Chapter 13 Bankruptcy?

Chapter 13 (or reorganization bankruptcy) is also called a wage earner’s plan because you follow a 3 to 5 year plan to repay collectors. You provide the trustee a list of creditors, total debt owed, and total monthly income, and monthly expenses. The trustee then creates a plan, so you can pay off arrearages, including missed mortgage payments and late fees, and thus (hopefully) bring your mortgage balance current.

First and Second Mortgages

The goal of Chapter 13 bankruptcy is to help you play catch up with a first mortgage. Should you, however, have a second (or even a third) mortgage, but your house is worth less than what you owe on the first, the second and third can be “stripped.” The junior mortgages become unsecured dues, and thus can be eliminated with a discharge.

secured debt vs unsecured debt credit cards What is Secured Debt vs Unsecured Debt?

These terms are common when discussing bankruptcy, and they’re easy to confuse.

Secured: a line of credit that’s secured by an asset. The best example is your mortgage because you put up the house as collateral, and in the event you default, the lender can foreclose and sell the property to recover their money. Additional examples include car loans or secured credit cards.

Unsecured: a line of credit that has no collateral backing, like credit card charges, student loans, child support, and personal loans.

Between Chapter 7 and Chapter 13, which is Going to Stop the Foreclosure Sale?

Both types of bankruptcy will stop the foreclosure sale dead in its tracks, BUT Chapter 13 bankruptcy is the better of the two if you want to save your house.

Chapter 7 temporarily stops foreclosure (for 3 to 4 months), and that’s only if the lender does not file a motion to lift the automatic stay with the bankruptcy court. It discharges other debts (e.g., credit cards, medical bills, and personal loans) but not a lien on the property, and that’s just what a mortgage is – another type of lien.

Chapter 13, on the other hand, creates a 3-to-5-year repayment plan, which you, the trustee, and lender will hammer out and agree upon. So long as you do not miss a monthly payment, you’ll clear your debt, including past dues, interest, and penalties, and catch up on missed payments.

You can consult a bankruptcy attorney to evaluate your situation and guide you in choosing a solution for your financial problems.

How long will Bankruptcy Delay the Foreclosure Process?

Bankruptcy can delay the foreclosure process by a few months or, if you establish a plan, a few years. However, as we alighted to before, the mortgage lender can file a motion with bankruptcy courts to lift the automatic stay to proceed with the foreclosure sale. A motion to lift the stay is more common with Chapter 13 than Chapter 7, because a lender may not want to wait 60 months to recover their money.

You can fight the lender’s motion, but you’ll have to prove the equity is sufficient to repay the loan, so the lender is protected from financial loss, and also that you can bring the loan balance current, if given time, and a plan is approved.

Pros and Cons of Filing for Bankruptcy

The truth is, when you file bankruptcy, there are serious consequences, and it’s up to you to decide if it’s worth it in the long run.

Pros of Filing for Bankruptcy

  • Stop the foreclosure process, preventing a foreclosure sale
  • Potential bankruptcy discharge
  • Delay other debt collection efforts and eviction

Cons of Filing for Bankruptcy

  • Need enough income to make monthly payment and pay arrearages
  • It’s expensive – filing fee and court fees included
  • Not all debts can be discharged
  • Severe impact to credit score

Yes, if you file for bankruptcy relief, your credit takes a big hit, as much as 200 points (if you had a good score to begin with). This derogatory mark will stay with you for 7 to 10 years, making it difficult or even impossible to apply for new lines of credit, refinancing, or jobs that ask for credit reports, and new utility contracts will be higher and ask for a safety deposit.

The Basics of Foreclosure

What is Foreclosure?

When you fail to make mortgage payments, and therefore default on the loan, and you make no arrangements to pay what you owe, foreclosure is the legal process by which the mortgage lender seizes the property to sell it to recover their money.

State laws vary on how foreclosure is done. All states allow for judicial foreclosure which goes through a court process. Other states permit nonjudicial foreclosure, but it only applies to deeds with power of sale clauses, in which case the lender can foreclose the property without a court order. The state court is not involved.

Does Bankruptcy Stop Foreclosure chapter 7 bankruptcy Deficiency Judgment

If the bank does not recover all their money at the foreclosure sale, they might move against you to collect the deficiency balance.

Credit Damage

Foreclosure is a serious mark against your credit. Your score will drop 100 to 160 points, and foreclosure will stay on your record for up to 7 years. Bad credit, as a result of foreclosure, makes it difficult to apply for new forms of credit, or to secure new housing or renting options, and can even hinder new job opportunities.

How Else Can I Avoid Foreclosure?

You can research other options to stop foreclosure – loan modification, reinstatement, refinance, etc. However, the easiest, fastest way to remove yourself from this situation is to sell the property before the foreclosure sale date.

We know selling is probably the last thing you want to hear, but unless you can come up with the money to make a lump sum payment to bring your loan current, it is the best option and saves your chances of buying another house.

Sell a House in Pre-Foreclosure to a Cash Buyer

Your best option, if you need to sell fast, is to sell to a real estate investor for cash, because:

  • No buyer lender mortgage approval is needed
  • No buyer lender appraisal approval is needed
  • No repairs or clean-ups are necessary
  • No fees or commissions
  • Many investors pay the closing costs
  • Guaranteed fast closing 

Most investors buy a house “as-is,” so it doesn’t matter if the house is old and outdated, damaged, or mid-renovation. An investor is happy to buy it. You can close in a few short days, return proceeds to the lender, and walk away from your problem property. Even better, some of our expert investors are able to take care of everything with the lender, and all you have to do is sign the title papers and move on.

Depending on the market, your equity and due mortgage amount, a short sale may be the only option left to you to get it sold in a timely manner to avoid foreclosure.

What is a Short Sale?

A short sale is the sale of real estate at a price that is less than the amount owed on a mortgage. The lender must agree to take less money and approve the buyer’s offer before you accept. You also want the lender to agree to forgive the deficient amount after sale.

This type of sale takes longer, but it has lender approval, so it stops the foreclosure process and turns it into a short sale process. 

A short sale still impacts your credit, but far less than a foreclosure or if you file bankruptcy. You’ll still lose points (up to 160), and the mark will be in your report for about 2 years, BUT it’ll be easier to recover your credit, with consistent payments.

What has been stated in this article does not constitute legal advice. Real estate law and bankruptcy law differs between states, and we recommend you get advice from a foreclosure attorney or bankruptcy lawyer or seek professional help to determine your best option to avoid foreclosure.

How to stop foreclosure at the last minute

How to Stop Foreclosure at the Last Minute?

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Facing foreclosure is scary: it means eviction, losing your house, damage to your credit, and consequent trouble with job applications, loan applications, and even renting options.

A lot of homeowners feel overwhelmed when they accrue missed payments and receive Notice of Default. They often do nothing, hoping it’ll go away: but foreclosure never goes away, unless you’re willing to do something about it. Do not give up hope yet: here are some last minute ways to stop foreclosure.

How to Stop the Foreclosure Process at the Last Minute

There are a few options to avoid foreclosure when there is very little time left, even if an auction date has already been scheduled. Here are 5 ways to stop foreclosure:

1. Sell Your House Fast

One of the best ways to stop foreclosure immediately is to sell your house fast. I know, I am sorry: it’s probably not what you wanted to hear, but it negates all the consequences of foreclosure, and you could walk away without outstanding debts. Let’s talk about it.

If you’re facing foreclosure, all your lender wants is their money back. A traditional sale takes on average 3 to 6 months. Even if you got an offer the next day after listing, it could still take up to 45 days to close, which in many cases is too much time and with no guarantee that it will be finalized.

Your best option is to sell your house for cash. The main benefit of a cash sale is that cash buyers can prove to the lender the existence of available funds. In some states, this puts an automatic stop to foreclosure, while in others it is a simple matter of negotiating and signing some papers to make the intent legal.

How to Stop Foreclosure at the Last Minute owe more than the house is worth What if you owe more than the house is worth?  

If your home loan is higher than the house’s market value, then you have an underwater mortgage, also known as an upside-down mortgage. This scenario often occurs when:

  • It’s a Buyer’s Market and house prices decrease, also reducing your equity
  • You missed payments and your accumulated interest increases how much you owe to the lender
  • Your property has suffered damage or needs extensive repairs, dropping its appraisal value compared to how much your loan is worth

When this happens, you may need to do a short sale to a cash buyer who does not need mortgage financing.

What is a Short Sale?

A short sale is when you sell the property for less than the remaining balance of the loan, plus additional fees incurred from late payments and foreclosure proceedings. Short sales require approval from the lender, because they have to agree to take less money.

Short sales are fairly simple when you already have a buyer to present to the lender. Lenders are more willing to approve cash buyers because they can prove they have immediate funds available.

Once the lender approves the cash offer, you’ll close, give proceeds to the lender, and hand over the keys to the buyer. Any money left over, you can pocket for yourself.

How to Find a Cash Buyer

A cash buyer is usually a real estate investor or iBuyer.

For example, Zillow Offers was an iBuyer. The catch, however, with iBuyers is that they typically charge a service fee and only buy properties that need some cosmetic improvements. They often stay away from situations that require too much effort on their part, like negotiating with a lender.

Now, there are many real estate investors, good and bad. You can do a quick search and find hundreds looking for houses in your area. But how do you know which ones are good and which ones will try to scam you?

SolidOffers can put you in touch with reputable real estate investors in your local market. We verify all investors who sign up to be a part of our program, and continuously evaluate them based on the feedback and experience of homeowners such as yourself.

We are not iBuyers, so you don’t have to worry about hidden fees; there will be none for our services. The investors who are accepted into our program subscribe for a membership and commit to remain up to standards, and those who excel are considered premium investors.

Our investors will purchase a house in any condition “as-is,” and many are local and well familiarized with local and state laws and have their own attorneys, removing the burden from you. All you have to do to get started is request a non-obligation offer for your house in foreclosure.

2. File for Bankruptcy

If a foreclosure sale is scheduled, filing for bankruptcy will put an immediate stop to it, or rather, it’ll delay it, giving you more time.

How to stop foreclosure at the last minute file for bankruptcy What happens when you file?

The bankruptcy process depends on the type you file – Chapter 7 or Chapter 13. We’ll talk more on those in a minute, but a couple things happen when you file for bankruptcy.

First, an “automatic stay” goes into effect. An automatic stay is an injunction that stops foreclosure proceedings and prohibits creditors from taking collective efforts against you. Typically, the stay lasts until your case is closed, but there are exceptions – reasons the stay can be lifted, based on your situation.

Second, you’re given a case number, and your case is assigned to a bankruptcy trustee. The trustee will gather and verify important information and meet with your creditors.

What happens next depends on what you want to do: do you want to keep your house, or are you willing to sell it to pay back what you owe?

Chapter 7 Bankruptcy

Chapter 7 is often called liquidation bankruptcy because you sell your assets to satisfy a portion (if not all) of what you owe. Some assets, like your retirement account, house, and car, are exempt from liquidation. You’ll have to discuss with a bankruptcy attorney what is and is not exempt.

Chapter 7 is your best option if you want to buy yourself time to make arrangements with the lender. Arrangements can be a loan modification or a short sale of the property. Whatever you decide, you’ll be given 3 to 4 months to live in the house without making payments. When your time is up, if you’ve done nothing to alter your state of affairs, the lender can foreclose on the property. Chapter 7 then eliminates your liability for the mortgage debt, so you’re not liable for any deficiency remaining after the foreclosure sale.

A word of advice: you do not want foreclosure AND bankruptcy in your credit report. 

Those derogatory marks together will plunge your credit score and make it difficult for you to secure new lines of credit, apply for a loan, purchase a new house or explore renting options without increased interest and security deposits. A bad credit report even follows you into a job interview, as employers consider it a mark against your character. Bankruptcy and foreclosure stay on your credit report for 7 to 10 years.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is better known as reorganization bankruptcy. It does not require you to sell assets to satisfy your debts. Instead, the bankruptcy trustee assigned to your case organizes your debt into a structured repayment plan, so you can pay off creditors in 3 to 5 years.

After you pay the filing fee ($313) to the bankruptcy court and provide needed information, you’ll propose the repayment plan. A judge will determine if the plan is fair and meets requirements. You will make monthly payments, which the trustee will distribute to creditors. You’ll still make mortgage payments to the lender, but the repayment plan will make up delinquent payments.

Can a Bank Foreclosure during Bankruptcy?

Filing for bankruptcy will stop foreclosure immediately, BUT the lender can file for relief from the stay to continue foreclosure. To stop this from happing, you’ll want to explore alternatives with your lender and come to a new arrangement.

How to stop foreclosure at the last minute loan modification 3. Seek a Loan Modification

A loan modification is just how it sounds: it is a change to the terms of your existing loan. The change can be reducing the interest rate, extending the time for repayment, a different loan type, or a combination of the three, resulting in a more affordable monthly payment.

In truth, it’s not a good idea to wait till the last minute to apply for a loan modification. Lenders are more likely to negotiate and approve when you contact them shortly after your first missed payment. 

If you ignore the situation and their attempts to reach out, it is unlikely that they will approve it. Plus, not all lenders stop foreclosure while reviewing your request to modify the loan. It depends on where you are: some state laws prohibit dual tracking – that’s when a lender proceeds with foreclosure while at the same time a loss mitigation application is pending.

Federal law, on the other hand, prohibits dual tracking if the application was received 37 days before the foreclosure auction. It’s a tricky area, so the best thing you can do is put in your request sooner rather than later.

Most times, when it’s a good relationship, a lender agrees to a loan modification because it’ll be less costly than foreclosure. Loan modifications have their drawbacks, however, including:

  • Paying a higher amount overall if the payment term extends;
  • House is worth less than the new mortgage;
  • Processing and legal fees, late fees and back taxes apply;
  • Any portion of the loan that’s written off is taxable income; and
  • Damage to your credit score if the lender reports the modification as a debt settlement.

4. Get a Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is a last resort ditch effort to keep foreclosure out of your credit report, after you’ve exhausted all other options.

What is a Deed in Lieu of Foreclosure?

A deed in lieu of foreclosure is a legal and binding contract in which you transfer the title of the property to the mortgage lender in exchange for mortgage relief. You give them the deed and the keys, and the house is no longer yours, it’s theirs.

Pros of a Deed in Lieu of Foreclosure
  • Stop foreclosure process
  • Spare your credit rating from mark of “foreclosure”
  • Walk away from your mortgage scot-free
Cons of a Deed in Lieu of Foreclosure
  • Still leaves a negative mark in your credit report
  • Lender might report deficiency (after they sell the property) to credit bureaus
  • Forgiven debt is taxable income

But wait: I thought a deed in lieu saves your credit? It can stop foreclosure from appearing in your record, but a deed in lieu is still itself a derogatory mark that’ll last 7 years and drop your score anywhere from 50 to 125 points, depending on what your score is when you sign the deed over.

Reasons a Lender Will Reject a Deed in Lieu

Lenders always assess the risks before shaking hands. They’ll appraise your property and the situation, and in the end might reject the deed in lieu for one or more reasons:

  • They’ll make more money at a foreclosure auction
  • Any subsequent liens filed against the property will become the lender’s responsibility
  • The property is in bad condition and/or worth less than the mortgage balance
  • It’s a bad market, and the house may sit, incurring carrying costs

5. File a Lawsuit

Filing a lawsuit only works with non judicial foreclosures. A non judicial foreclosure, not to sound obvious, is a foreclosure that does not go through the court system. A lender might also call it a Power of Sale, because of the ‘power of sale’ clause in the mortgage agreement. Without that clause, the lender has to take you to court to foreclose.

How Much Does It Cost?

Filing a lawsuit may be the best legal option you have to stop foreclosure and save your house; however, it does not come cheap. Also known as mortgage litigation, it incurs filing fees, and you’ll need representation in the court room. After sifting through foreclosure lawyers, hopefully you find one who can help prove your version of events.

You’re challenging the lender’s right to foreclose. You (with help from your foreclosure attorney) must demonstrate the lender made some error significant enough to stop foreclosure. Most cases, be warned, do not make it to trial, so have your ducks in a row.

SolidOffers Can Help You Stop Foreclosure

If the foreclosure process is already close to its end, selling your house is the quickest, easiest, and least impactful way to stop foreclosure.

We can put you in touch with trustworthy cash buyers in your local market who make fair cash offers on “as-is” properties, so you don’t even need to worry about repairs. Our friendly investors usually cover closing costs and additional fees, saving you money, and can close in as little as 7 days.

There is no fee for our services. We are happy to give you a free, no-hassle, no-obligation offer today: just click below to get started. We’ll also empower you with need-to-know foreclosure information and give you a free consultation on what’s right for your situation.

What has been stated in this article does not constitute legal advice. Real estate law differs between states, and we recommend you seek advice from a foreclosure attorney or bankruptcy attorney or another professional to help you determine your best ways to stop foreclosure at the last minute.

selling a house in foreclosure court house gavel

Can I Still Sell My House in Foreclosure?

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If your house is in foreclosure, you likely fell behind in paying the mortgage, and you may also be incurring the lender’s attorney fees for your delinquency. Different people have different feelings and reactions when in this situation. From feeling sad, ashamed, disappointed, in panic, or even paralyzed or in denial, and having the instinct to ignore the problem, as if it could just go away…but it won’t, and when in pre-foreclosure, time is of essence. But wait! All is not lost. Foreclosure doesn’t happen overnight. It’s a long process, for you and the lender. The worst thing you can do is do nothing.

Do not wait until your foreclosure is 30 days away, when the lender takes possession of the house with the intent to auction it.

Are you in Pre-Foreclosure or in Foreclosure?

Although the term “foreclosure” is often used to describe both circumstances, there is actually a significant difference that comes down to ownership. 

Pre-foreclosure is part of the process to foreclosure. Most times, it starts 3 to 6 months after your first missed payment.

At that 3-month mark, you’ll likely receive a Demand or Notice to Accelerate letter from your lender to pay up in 30 days, or they’ll foreclose on your house. From the date of notice, it may be 2 to 3 months till the scheduled sale of your house at auction. 

Foreclosure is at the end. Your house is no longer yours. The bank repossesses it or sells it at auction. The foreclosure is also marked in your credit history for a period of seven years, making it extremely hard for you to be approved for a new house mortgage.

Pandemic Exceptional Circumstances

Due to the coronavirus pandemic, the government has offered mortgage relief options and the type of mortgage you have may have different requirements. Many mortgage lender servicers couldn’t even start the foreclosure process before January 1, 2022 and without contacting you to review your options.

Can I Sell My House in Pre-Foreclosure?

If you’re behind in payments because you fell on hard times, you can try to strike a Forbearance Agreement with the lender, but this does not void what you owe. Payment is only postponed. It is also less likely to be approved, if you’re already in pre-foreclosure, to request forbearance.

If you get approved for forbearance, this will give you more time to sell your house or, if you change your mind, to try to make up for missed payments.

The time you have is important because, even in a hot market, depending on the condition of the house and its location, it may be hard to sell within a short timeframe, using the traditional method of listing it with an agent.

Selling your house during pre-foreclosure is one way to prevent foreclosure, and if it’s done early enough, you may be able to get the market value for your property. If you want to list it, it’s important to find a top agent who can help you sell it with the intention of paying off the mortgage and potential lender attorney fees.

In the potential of a short sale, you need to notify your lender, as it requires their authorization. 

Can I Sell a House in Foreclosure?

When the house is foreclosed, meaning the bank takes ownership, the bank will usually send an agent to help you relocate. Most people think a sheriff will come and kick them out, but that only happens if you fight the bank.

Once the bank forecloses the house, it starts the courthouse steps to have it sold at auction. It is not immediate. Until the day of the auction, you can still attempt to sell. Most banks and servicers would rather avoid the auction, if it can be sold prior, and may even be willing to extend terms and negotiate to have it done.

Step 1: Calculate What You Owe

If you’re behind in mortgage payments, there are likely late fees attached. Also, you may have accrued fees owed to the mortgage company’s attorney which are associated with your delinquency.

Add up the sums of what you owe, plus any interest, and subtract it from your estimated sale price.

Step 2: Subtract Selling Fees Too

That’s right: it costs money to sell a house. Selling fees include staging and cleaning costs, as well as the realtor commission, closing fees, seller concessions, and moving costs. Deduct these from the sale price.

Why all the deductions? Because you want to find out if selling your house will cover what you owe your lender, as well as closing costs and selling expenses. With any luck, you’ll have some money left over. If, however, you’re in the black, then perhaps you should negotiate with your lender to do a short sale.

Step 3: Hire a Realtor or Sell FSBO

If the foreclosed house goes to auction, you may still end up with debt due to legal fees. Plus, you will pay taxes for the “forgiveness” of the mortgage. The best situation is to get it sold and hopefully, get some of the excess funds.

Your timeframe to sell is short. Your options include:

  • If the house is in a hot market, a good location, and in great shape, it may sell fast with an experienced Realtor, who knows how to navigate the extra paperwork and evaluate potential buyers.
  • Otherwise, your best option is to sell it yourself to an investor. Investors with experience in purchasing foreclosed properties know how to speak with banks and have their own lawyers ensure a successful transaction.

Step 4: Whatever Path You Decide – Keep the Lender in the Loop!

Keep your lender informed of progress throughout the house selling process. Communicating with the lender is vital. Many will work with you to get it sold rather than foreclose.

SolidOffers Can Help You Sell Your Foreclosed House

When time is of the essence, your best option is to sell your house in foreclosure to a real estate investor. SolidOffers screens hundreds of real estate investors, confirming their reputation, and connects you with legit investors in your market who can help you. Not all investors are the same. When the house is already foreclosed and set to be in auction, you need an experienced investor who will essentially do all the heavy lifting, using their resources to work it out with the bank.

If you are in pre-foreclosure, or your house is already foreclosed, contact us ASAP, so we can ease the process of selling your house in foreclosure.

How to Sell a House if You’re Behind on Mortgage Payments

How to Sell a House if You’re Behind on Mortgage Payments

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Anyone can fall behind in their mortgage payments. Illness, divorce, job loss – whatever the reason, you quickly find yourself falling behind on bills, and debt grows. If you fall behind in paying your mortgage and fail to take action, you risk foreclosure.

Foreclosure has its consequences, including a deficiency balance, tax implications, difficulty buying another house (or renting), and a big hit to your credit score. Depending on where you live, you may have 120 days before your property is foreclosed.

Often the best way to avoid foreclosure and save yourself a lot of time and stress is to sell your property and pay back what you owe the lender. But selling your house fast takes work and finding a willing buyer.

How to Sell Your House if You’re Behind on Mortgage Payments?

To avoid losing your house, you can try consolidating or refinancing your loan or entering a forbearance agreement with the lender, but a lot of homeowners sell when they see no way to pay what they owe fast enough.

Step 1: Talk with Your Lender

Your lender needs to be informed of your decision to sell and why. They may be able to help you by giving you an extension, giving you more time to find a buyer. However, whether you can sell or not will depend on how much the house is worth versus how much you owe.

If you are not underwater yet, and your property is worth more than what you owe, you can sell and pay back the lender. Easy and straightforward.

BUT, if your house is worth less than the outstanding mortgage payment, you’ll need to do a short sale. The catch is your bank has to agree with the terms of the sale.

Step 2: Do Your Research

To find a buyer fast, you need to know your market. Gather all the information you need to know how to get their attention and negotiate a quick deal.

Step 3: Find a Realtor You Can Trust

Unless you are confident you can sell FSBO in a number of days, you’re going to need help. Find yourself a good real estate agent you can trust to help you navigate the market and negotiate a good deal.

Step 4: Make the Property (and Sale) More Appealing

As you may know, traditional buyers tend to request repairs or a reduction in your asking price. Chances are, if you are behind in payments, you cannot spare the money (or time) for repairs. So what are your options?

You can give the house a facelift: painting, cleaning, and improving curb appeal are a few things you can do. BUT you can always offer financial incentives to inspire confidence in buyers and satisfaction with the sale.

Step 5: Sign Paperwork, Close, and Pay What You Owe

Speaking through your agent, negotiate the terms of sale quickly, sign the necessary paperwork, and get it expedited.

You should keep your lender informed throughout the sale and notify them of closing day. Once you have the proceeds from sale, pay off what you owe the lender fast, so you can walk away without further complications.

What If I Can’t Sell My House?

If you’re worried you cannot sell, and time is running out, the best thing you can do is sell to a real estate investor. Why? Because investors pay cash for properties “as-is.” No repairs, no cleanings, no traditional sale warranties or inspections, and no lengthy mortgage approvals. It’s a fast, easy transaction.

You enjoy a quick closing, on a day of your choosing, and can pay back the lender what you owe in cash. This way, you avoid the repercussions of foreclosure, giving you a better chance of buying another property and saving your credit score.

What are the Consequences of Foreclosure

What are the Consequences of Foreclosure?

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Foreclosure happens when you fail to make mortgage payments, and you default on the loan, or you violate the terms of the agreement and lose ownership of your house. It’s important that you know what happens if you do nothing and foreclosure becomes unavoidable.

Contrary to what most homeowners think, walking away is never the best option, even if your property is valued lower than what you owe. The consequences of foreclosure are devastating and long lasting.

Consequences of Foreclosure

Foreclosure is a time-consuming and stressful, and sometimes even expensive, process. If you fear it is impending, talk with your lender about other options, like a temporary forbearance agreement.

The truth is, the bank does not want to foreclose on your property because it’s a long, difficult process for them too, and costs them money. But between the parties, you’ll take the biggest hit.

1. Damage to Your Credit Score

If you do nothing to stop foreclosure, your credit score will drastically drop. Good credit scores drop by 100 points or more, while excellent scores reduce by as much as 160 points. So the higher your score, the more impact foreclosure will have on it.

It can take three to seven years of on-time payments to fully recover your score.

A bad credit score leads to expensive interest rates and limited credit, making your financial recovery difficult.

2. May Owe a Deficiency Balance

If you fail to pay off what you owe during the foreclosure period, the property goes to auction. It’s rare that a property sells for more than the amount owed, but if it does, there’s no deficiency. If it sells for less, you’re responsible to pay the remaining debt.

Deficiency Judgements vary by state law.

3. Tax Implications

Any time a debt is forgiven, the IRS considers it income and taxable. If the debt (aka what you owe on your loan) is canceled or forgiven, it is reported to the IRS on a Form 1099-C, Cancellation of Debt. The amount must be reported with your income taxes.

4. Forfeit getting a Fannie Mae mortgage for at least 7 years

Fannie Mae and Freddie Mac Agency Mortgage Guidelines demand a waiting period of 5 to 7 years (from the date of foreclosure) before you can qualify for a conventional loan. As a result, it will be difficult for you to borrow money to purchase another house.

Extenuating circumstances, like job loss, illness, or divorce, may alter the waiting period.

5. Eviction

Once the bank seizes the property, it’s no longer yours. You’ll be evicted and lose any equity you may have established.

6. Problems Finding a New Home or Renting

You’ll have to find a new place to live after you’re evicted. Since there’ll be a waiting period before you can get another loan, renting may be your only option.

Landlords look at your credit score to determine your level of responsibility. A foreclosure in your credit report and a consequent low score will make landlords wary. And even if a landlord is willing to accommodate you, it may be in the form of an inflated security deposit.

Facing Foreclosure? Sell Fast to Avoid the Consequences

If you cannot pay what you owe, rather than go through with foreclosure, you can short sale to a real estate investor. Most investors make a cash offer on a property “as-is” – that means no repairs, renovations, or cleaning. They forgo lengthy mortgage approvals, traditional sale warranties, appraisals, and inspections, and can often close in 30 days or less.

You and your lender can negotiate the short sale terms, sell fast, and you can walk away without a hit to your credit score or owing the bank more money.

handshake house sale Pros and Cons of a Short Sale

Pros and Cons of a Short Sale

Home » foreclosure


When a homeowner is financially distressed and cannot pay their mortgage, their best option is to sell. A traditional listing takes too long. Even if a buyer showed immediate interest, they (and their lender) will request repairs. There is no time to restore the house, no time for negotiations. You need to sell fast and pay off the lender.

Home sellers in these situations often turn to a short sale. It is a better option than facing foreclosure. Let’s compare and discuss the advantages and disadvantages of a short sale.

Why You Should Avoid Foreclosure?

Foreclosure is when the lender takes possession of the mortgaged property because the borrower defaulted on mortgage payments. The lender will then try to sell the house to cover their losses.

The consequences of a voluntary foreclosure include:

  • Credit Impact: your credit score plummets as much as 160 points, and “foreclosure” stays on your credit report for up to seven years.

 

  • Housing Issues: it will be several years before you can buy another house, because a foreclosure discredits you with lenders.

 

  • Deficiency Judgement: there is a chance that if the lender sells the house for less than what you owe, you will be ordered to pay the difference.

 

  • Debt Relief Taxes: even if the deficiency is forgiven, the IRS views the canceled debt as taxable income.

What is a Short Sale?

A short sale is when a property owner at risk of default sells their property for less than the amount owed on the mortgage. The lender must approve the sale after being given collective documentation by the seller as to why it’s a good idea.

A short sale is actually a chance for a lender to get more money than if the property were to go to foreclosure auction. Once they receive your package, the short sale process takes more than 30 days to complete. If approved, and a buyer makes a good offer, the lender will issue a short sale approval letter.

Pros of a Short Sale

The advantages of a short sale include:

  • Avoiding foreclosure and being released from your mortgage obligation.

 

  • Recovering your credit score sooner.

 

  • Getting financial approval for another house more quickly.

 

  • The lender might pay the closing costs.

Cons of a Short Sale

The disadvantages of a short sale include:

  • More parties are involved in negotiations: the lender has a higher stake and must approve a buyer’s offer.

 

  • If there is more than one mortgage or lien against the property, all lienholders are involved in negotiations.

 

  • A buyer’s pre-approval for financing could expire before the lender approves their offer.

 

  • If the property is in bad condition, the buyer’s lender may not approve a loan to purchase.

 

  • A deficiency judgement could still be issued if the lender does not forgive the difference between the sale price and outstanding mortgage balance.

 

  • Your credit score will still take a hit, also as much as 160 points, and a short sale will stay on your credit report for up to seven years.

Short Sale versus Foreclosure: Credit Score

I have said here that both foreclosure and a short sale will hurt your credit score. So which is the lesser evil? The difference is:

  • With foreclosure, the entire unpaid loan amount, as of the date of foreclosure, is shown on your report.

 

  • With a short sale, the reported balance is the outstanding loan balance minus the sale amount received.

If the difference between these balances is significant, the negative impact will be less severe with a short sale.

Sell for Cash to an Investor Buyer

You can speed up a short sale by selling to a real estate investor. Investors pay cash for a property “as-is,” be it damaged, neglected, or vacant. They do not require traditional sale warranties, an appraisal or inspection. Forgoing these steps will save you time and headaches.

The investor pays 100% of closing costs and associated sale fees, saving you and the lender money. Furthermore, you and the lender choose the closing date, which can be in 15 days or less. You can offload the source of your financial distress, satisfy your debt, and start over with a new home.

Solid Offers how to sell house in Forbearance

4 Ways to Sell Your House in Forbearance

Home » foreclosure


To delay a foreclose on the mortgage, lenders and borrowers can forge a mortgage forbearance agreement. If you try to sell your house while in forbearance, the lender might extend the forbearance agreement. Foreclosures are expensive and can drag out for months. Lenders want their money back fast, and they have neither the time nor the resources for dealing in home sales.

Keep in mind: the forborne amount of your mortgage must be paid back in full upon sale of the home. This comes out of the purchase price of the house.

1. Traditional Listing

A listing agent lists the home on the Multiple Listing Service (MLS) and a brokerage site (if associated with a brokerage) and produces yard signs. They pinpoint the selling price, stage and market the home, show it to prospective buyers, and negotiate offers. It takes at least 70 days to make a sale, and the agent is compensated for their efforts. Compensation is either a small flat fee at the beginning or commission upon sale.

2. Realtor

A realtor is different from a listing agent in that a realtor is a member of the NAR. Realtors have more resources than agents to sell a house, but their responsibilities are similar. They help decide the asking price, advertise and show the home, and evaluate offers. Upon the sale of the home, they receive a percentage of the sale price as a commission.

Selling with a realtor takes 70 days or more, and this can be attributed to buyer actions. In the purchase process, buyers have more steps than sellers. These steps include the home inspection, appraisal, and mortgage approval. If a step is delayed or fails, it takes more time to sell the house.

3. Sell It Yourself

Selling a house by yourself is a huge undertaking. You are responsible for the following:

  • Determine the market value of your home.
  • List the home online.
  • Market the home.
  • Clean and stage the home.
  • Coordinate walkthroughs.
  • Negotiate terms of sale.
  • Handle the closing.

Without professional help, it can take two to six months to sell the house by yourself. It is also a costly venture, and if you are in forbearance, you may not have the funds to sell a house.

4. Instead, Sell to a Real Estate Investor

If you want to make a quick and easy sale without having to market, show, or stage the home, consider selling to an investor. Most investors will make a cash offer on the house regardless of its condition or while it is in forbearance. You can close fast, pay off your loan, and be free of debt.

For information under the CARES Act, Mortgage Forbearance, see What You Need to Know by consumerfinance.gov.

solid offers Worried man who needs to sell house while in forbearance

Can I Sell My House while in Forbearance?

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When a mortgage borrower is unable to pay off their loan, a lender will opt to foreclose. This means they seize the property and sell it to recover their lost money. To avoid foreclosure, lenders and borrowers will forge a forbearance plan.

Added October 19, 2021: The Bureau of Consumer Financial Protection proposed amendments that establish a temporary COVID-19 emergency pre-foreclosure review period until December 31, 2021, for principal residences. This does not extend to secondary residences, vacation properties, or rentals.

The final rule establishes temporary procedural safeguards to ensure borrowers have an opportunity to be reviewed for loss mitigation before their forbearance period ends and before the mortgage lender can make the first notice or filing required for foreclosure. Moreover, the proposed amendments temporarily permit lenders to offer loan modifications to borrowers experiencing a COVID-19-related hardship post evaluation.

The CFPB’s final rule took effect August 31, 2021. These rulings apply to federally-backed loans. All other loan types are at risk of foreclosure without review. Check with your lender for options and proceedings. Sources include the CFPB and Federal Register (National Archives).

What is Forbearance?

Forbearance means the parties agree to new mortgage terms. The borrower will pay interest-only payments or smaller payments for a few months or a temporary pause on paying back the loan. These postponed payments will eventually be due. This debt is not forgiven.

Forbearance is good for anyone who has suffered a hardship. If a home is damaged in a flood, or the economy takes a hit, and you lose your job, forbearance eases mortgage stress. It is a complicated agreement because there is no “one size fits all” arrangement. Options will vary based on the lender, type of loan, and owner requirements in the mortgage loan.

Forbearance under the CARES Act

Protections under the CARES Act apply to all federally backed and federally sponsored mortgages (Updated: April 2021 to reflect new information).

  1. For mortgages backed by the FHA, USDA or, VA, the deadline to request an initial forbearance is June 30, 2021.
  2. For loans backed by Fannie Mae, Freddie Mac, FHA, USDA, or VA, your lender or loan servicer cannot foreclose on you until after June 30, 2021.
  3. If your financial hardship is due to the COVID-19 pandemic, you have a right to request and obtain a forbearance for up to 180 days (for a total of up to 360 days).
  4. When the forbearance period ends, you are not required to repay the skipped payments in a lump sum. You can discuss a repayment plan.

Can I sell my house while in forbearance?

The answer is yes; you can sell your house while in forbearance. However, the forborne amount must be paid back upon sale of the home. This amount will likely come out of the purchase price of the home. You must also pay off the owed balance remaining on the mortgage; this too comes out of your profit.

If you plan to sell while in forbearance, your lender might extend the forbearance agreement. Foreclosures are hugely expensive and can drag out for months. Lenders want their money back fast, and dealing in home sales can exhaust their time and resources. If you sell, a lender can receive full payment of the loan and be spared the home sale process.

Things to Consider

A forbearance is, again, a temporary loan modification. Note the word “temporary.” Even if you get the lender to give you an extension, you have to consider the selling process.

You enter forbearance because you cannot afford to make regular monthly mortgage payments. Now consider:

  • If a home needs repairs or renovations, can you afford these?
  • Can you afford professional cleaning and staging services to maintain walkthroughs?
  • If you hire a realtor, they get a commission fee from the purchase price of the home. Selling a home costs money, and if you already have trouble making mortgage payments, can you really afford to sell through a traditional listing?
  • In sum, can you afford to sell to another hopeful homeowner?

Instead, Sell to an Investor

If you want to sell fast and make a profit, consider selling your house to an investor. Most investors will make a cash offer on a home regardless of its condition or while it is in forbearance. You can enjoy a quick closing, pay off your loan and delayed payments, and be free of the menacing debt.

solid offers How to sell house in pre-foreclosure or foreclosure

How to Avoid Foreclosure and a House Auction

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Life is full of ups and downs. Sometimes the job market is great, and other times we are left scrambling to make ends meet. For many homeowners, a downturn can mean coming face to face with pre-foreclosure and even foreclosure.

The good news for the distressed homeowner is that there are options. Before we can discuss which options are viable for you, you will first need to determine precisely how much you owe on the property and if any assistance is available from either the government or the mortgage provider.

Contact Your Lender

The best time to call your lender is before you start missing payments. This puts you in a much better position, and the mortgage provider may be able to offer you payment deferral or other assistance. At the very least, you will be able to establish precisely how much you owe and when you have to pay it. Collecting the facts is the first step towards resolution. 

Are you already in Pre-Foreclosure?

The term pre-foreclosure frightens many folks, but it does not mean your home is being taken away or sold out from under you. At least not yet. Pre-foreclosure means that you are behind on your mortgage payments and have received, or should have received, a Notice of Default for lack of payment. During pre-foreclosure, the lender will initiate the legal proceedings to repossess the property eventually. As long as you can pay what is owed during the pre-foreclosure period, then all legal proceedings cease, and you never have to face foreclosure. 

Even if you are unable to afford the back payments, there are many ways to avoid foreclosure. And, believe me, you want to avert foreclosure if at all possible. I’ll explain why before we delve into the various options available to you.

What a Foreclosure means for the Homeowner

Without taking evasive action, a house in pre-foreclosure will inevitably end in foreclosure. Here is what that means.

  • A court ruling gives the lender full ownership of the property.
  • The occupants of the property will be forcibly evicted from the premises.
  • The lender will sell the property, generally at auction, and keep all proceeds of the sale.

Unfortunately, the consequences do not end there.

  • The foreclosure will go on your permanent record.
  • You will be unable to qualify for a loan even years after.
  • Your credit score will plummet.
  • You will be ineligible for relocation assistance.
  • The foreclosure will turn up on rental and employment background checks.

For these reasons, not to mention the stress and psychological trauma, foreclosure and the house sale at auction are a very last resort. Thankfully, there are ways to avoid it.

Option A: Find the Funds and Make the Payments

This is, by far, the best outcome. It certainly won’t be easy, but there are ways to raise the money necessary to stave off foreclosure. Doing so will enable you to retain ownership and residency of your property while protecting your credit and generating equity.

Here are a few methods to consider (the more you can apply, the better):

  • Delve into your budget and cut out any non-essentials. 
  • Consider getting a second job or renting out any unused bedrooms for supplementary income.
  • Investigate a loan modification to lower your monthly payments.
  • Some lenders will offer forbearance, meaning you won’t have to make mortgage payments (or at least not all of it) for an agreed-upon time. This can provide the time needed to get back on your feet and save up money to make the back payments.

These options are great for those going through a temporary rough patch and need some time to catch back up. If, however, you see no chance of alleviating your financial difficulty in the near future, other options may serve you better.

Option B: Equity in Your House? Sell Quickly

Why quickly? Because, depending on what stage of the foreclosure process you are in, you may not have much time before the lender takes ownership of the property, and you are left with nothing. 

This option works best if you have equity in your house, meaning your mortgage is less than the property is worth. Selling your house under these circumstances will enable you to pay off the mortgage (thereby avoiding foreclosure), save your credit score, keep a foreclosure off your record, and let you keep any money left over from the sale to start fresh.  

Here are your two best options to sell and walk away with cash in your pocket:

  1. Hire a Real Estate Agent. Although you may net a little more this way, a traditional sale typically takes months. This time factor makes it risky since that is time you may not have. Not to mention the house’s risk falling out of escrow, the expenses involved while the house is on the market (taxes, insurance, utilities, etc.), or the money that is so often needed for required repairs during a traditional sale, money you may not have.
  2. Sell quickly to an investor for cash. By using a trusted network of investors, such as offered by SolidOffers.com, you can have a cash offer on your house within 24 hours. A cash buy also means a fast close (usually within 7-14 days, so the bank won’t have a chance to foreclose). You won’t have to pay any real estate commissions, you can pick your moving day, and a cash buyer will often cover all the closing costs. You may not net as much this way, but you will be able to walk away with money in your pocket (instead of in the lender’s) while avoiding the long-term consequence of a foreclosure. 

If you are pressed for time, selling your house quickly to a cash buyer is often your best route in avoiding foreclosure. Not everyone has equity in their property, though. So, what to do if you owe more on the mortgage than your house is currently worth?

Option C: Money out of Pocket

Of course, you could sell your house for less than the mortgage amount and then make up the difference yourself. This, of course, only works if you have the funds to do so. Even then, it is a reluctant option. Nobody wants to pay the bank out of pocket and receiving nothing from the sale of their house, but the consequences are far less severe than a foreclosure. For some, it may be their only option.

Option D: Short Sale

If you are upside down on your mortgage, you may want to consider a short sale. A short sale allows you to sell your house for less than you owe on it and, usually, walk away without debt. But there’s a catch. 

Since your lender will receive less than the mortgage balance, they first have to agree to a short sale. Not all lenders will, and those that do will have the final say on any offers. Your credit score may still dip, but not nearly as much as with a foreclosure. There are some other drawbacks too.

Since the lender is involved in the selling process, the escrow period can take months or years once a buyer is found. And there are no guarantees with a short sale. If the best offer is well below the mortgage balance, the lender may refuse the sale or try to hold you responsible for the difference (depending on the laws in your area).

A foreclosure is never easy, but fast action can save you time, money, and grief. Your best option is to make up your payments.

Your second-best option, if you have equity in your property, is a quick cash sale. Doing so will avert foreclosure while putting the remaining proceeds in your pocket instead of the lenders. And that, we can all agree, is where your money belongs.