Let's clear up a misperception.  As we encourage troubled homeowners to "avoid foreclosure," we are not assuming that everyone will be able to keep their home.  Some people got in far too deep and bought homes far beyond what a person in their income bracket could really afford.  When ARMs adjusted or property values plummeted, these people and many others whose homes were more modest find themselves in need of a solution far bigger than anything out there to keep them in their homes.  Some borrowers lost their jobs or second income, got divorced, got sick, or ran into other problems.

Frankly, some people have had enough.  Big, pricey homes usually come with big, pricey utility and maintenance costs that will not change even if the mortgage is refinanced or the mortgage loan modified.  (Even moderate homes can be a burden if family circumstances have changed.)  Moving out of the home may be the best option for a family.

When put in proper perspective a house is a material possession that provides shelter.  Many of the intangible things tied up in the concept of "home" are transferable so long as the family stays together.  Yet, foreclosure can be a devastating event for many people which leaves them feeling powerless and trashes their credit.

So, what does "avoid foreclosure" mean?  It means putting people in a position where they have some control over their lives.   This might be accomplished in one of several ways:

Loan Modification - for people who want to keep their home and have enough income to do, changing the loan terms to lower the payment might do the trick.

Refinancing - for those who want to keep their home but get a better interest rate and better terms, refinancing might lower the payment over the long run.

Short Sale - when keeping the home is not an option, making the choice to sell for a price in line with the market but less than the amount of the loan is an appealing prospect.  This may negatively affect your credit but not as much as a foreclosure will.

Deed-in-lieu of foreclosure - giving the house back to the bank.

The recently-passed Making Home Affordable program enabled loan modification and refinancing for many who qualify but did not address many homeowners who are underwater or who have insufficient income.  New provisions announced last week expanded the program to offer lenders incentives to be more amenable to short sales and deed-in-lieu.

In all of these cases, lenders accept these alternatives because it is more cost effective for them to do so - not due to any altruistic motives.  But homeowners still benefit, even if part of the solution requires they give up the home and move on to the next phase of their lives.

Homeowners in trouble: Foreclosure does not have to be the end of the story.  There are alternatives best explored with a HUD-approved housing counselor.  Call Hope Now at (999) 995-HOPE to start planning.

 Janice Petteway and the Exit Real Estate Team would like to part of your solution. We do short sales in Central Florida.