Lender Approaches to Dealing with Foreclosure

Your lender may offer a variety of foreclosure prevention loans, but they generally boil down to these approaches:

  • Deed-In-Lieu - Borrower voluntarily gives up the title of the home to the lender.
  • Loan Modification - A change in one or more of the terms of the note in order to bring the loan current by adding the amount owed to the loan balance and/or re-adjusting the balance within the existing remaining term. This will not reduce the total loan balance.
  • Military Relief - Rights and protections provided under the Servicemembers Civil Relief Act or the California Military Families Financial Relief Act.
  • Repayment Plan - A written agreement allowing borrowers to repay their late or unpaid mortgage payments by making a scheduled payment in addition to the regular monthly payment.
  • Short Sale - Borrower selling the property and the lender accepting less than total balance of the loan.
  • Special Forbearance Plan - A written agreement allowing borrowers to either suspend or reduce monthly payments for a specified period of time until they are able to make payments to bring the loan current.

More detailed information regarding these options is available from your loan servicer. Prior to contacting your lender, gather loan documents and review them. Having your deed of trust, promissory note, closing escrow statement, and disclosure statements in hand will be beneficial. Seeking help before you miss a payment is also wise when you seek assistance from foreclosure prevention programs outside your bank. Some new programs will turn you away if you have been delinquent even once.