If you are a homeowner facing foreclosure, you're probably suseptible to knee-jerk reactions and feel undue pressure to take any kind of action.  More then likely you have no money, you're late in paying your bills, and you are receiving one notice after another from your mortgage lender dunning you that if you don't do something right away that they are going to take possession of your home from you. What options do you have?

You have numerous options. Take time to step back and look at your situation with an objective eye.  Don't allow anyone to "force your hand" and cause you to react with a course of action that is not in your best interest.  Depending on your situation, not all of the options below will be available to you.  But it's very likely that at least some of them may be. One of the first things you should do is contact the mortgage lender that holds your mortgage to discuss your options. One of the worst things you can do is avoid your mortgage lender and not discuss your situation with them. As uncomfortable as this may be it is definitely less uncomfortable then being evicted by the sheriff.  

I.  If you really want to stay in your home and are willing to work hard to keep it, you probably have some options that will allow you to do this -

Option 1: You can reinstate the mortgage. If you have the ability to borrow the money from relatives or friends, you can reinstate the mortgage by catching up on missed payments along with any interest, penalties, and fees your mortgage Lenderhas applied to your account.

Option 2: You can refinance. If you have equity built up in the property, you can consider refinancing the current mortgage to reduce payments and if you have credit card debt, you may be able to consolidate all your debts into a single monthly payment.  This single monthly payment may be less than the total payments you are currently making.  The timing for this option is critical.  If your financial situation has degraded to the point of negatively impacting your credit rating, this may not work for you.

Option 3: You can try to negotiate a forbearance.  Your mortgage lender may be willing to set you up with a payment plan that lets you to catch up on your payments. Just a word of caution here...be careful that the payment plan is affordable (so you don't end up in the same situation a few months down the road).  This option would be for someone who is experiencing some short-term financial setbacks and can maintian their normal mortgage payments if not for those short-term financial setbacks.

Option 4:  You can sell your home to an investor and then buy it back at a future time.  This is a serious option if you are running out of time.  You may be able to sell your home to an investor and purchase it back with a lease-option agreement or a land-sale contract.  With a lease-option agreement you rent the property for a fixed period of time.  You would have the option to buy the property back at the end of that time.  With a land-sale contract, you exchane who you make payments to , you'd make payments to the investor who purchased the property rather than to the mortgage lender. In both cases, you would need to sign a contract that almost always has a forfeiture clause stating that you lose the house and everything you paid on it if you do not honor the agreement, very similar to what you have with your current mortgage lender.  So, depending on your financial situation and the cuases of it, check with your attorney before signing anything having to do with these type of transactions. The flip side of this option is to sell to an investor and rent the property from them.  If the investor is buying the property for long-term income, they may be willing to rent it back to you.  The advantage to them is that they already have a tenant for the property.  You would have had proven to the investor that you had and will properly maintain the property. This option is an excellent one if you have kids in school and need several months or even a year or two to get them through school before moving.

Option 5: You can redeem the property after the sheriff's sale. Your have to watch your time fences with this option.  There are many states that have a mandatory redemption period.  During this redemption period you can purchase the property back from whoever bought it at the sheriff's sale.  You would have to pay the buyer the amount that they paid plus interest and any qualifying expenses the person paid (such as property taxes and insurance). To find out more details about tbhis you would need to contact your register of deeds at the county courthouse because the laws and regulations are different for each state; you would need to find out whether your municipality has a mandatory redemption period and how long it is. This option would require borrowing the money from relatives, friends, or a private investor.

II.  Maybe your financial situation is such that you cannot use any of the above options or the timing of the resolution to your financial setback is not known.  You may end up having to sell your home.  Although, many other real estate agents by-pass discussions about ways to keep your home and move directly to selling your home (after all, that is why they are in business), we always try to look at ways that people can stay in thier homes and why we presented those options first.  But, with that said, in almost 90% of the situations involving foreclosures the homeowners are best served by selling their home and finding more affordable accommodations.  If the seller has equity in the home then this becomes especially true.  Because if you can sell the home for more than you owe on it, you won't lose the equity in a foreclosure.  Some options you have for selling your home -

Option 6:  You can put your home on the market. This is the standard process that you would hire the Realtor in your area to list your property. It's important that you tell the Realtor that you are facing foreclosure and ask whether they would be willing to accept a lower commission (depending on the property being listed, we would definitely consider this as a way to help the seller).  On the average, a Realtor will sell your home in less time and for more money than you dcould sell it for on your own.

Option 7: You can negotiate a short sale with your mortgage lender.  The situation could be that you cannot sell the home for enough to break even due to current market conditions in your area (if a neighboring home in your area is selling for less then what you need to pay off your mortgage, you may be a candidate for a short sale).  Under these circumstances your mortgage lender may be willing to negotiate a short sale,  which means that they would accept less than the full amount owed on their loan. Mortgage lenders who hold second mortgages or other liens against the property may be more willing to do this because they would stand to lose everything if your home ends up being sold at sheriff's sale.

Option 8:  You can sell your home to an investor. This option is different then the options involving investors above because with this one all you are looking to do is to come away with some cash, after paying off the mortgage loan.  The above options involve getting enough for your home to just pay off the mortgage loan.  If there isn't enough time to sell your house before it goes into foreclosure, you may opt to sell it to an investor who will pay cash and close the deal within an extremely short period of time.  However, you will be looking at having to accept up to about 20% less than the market value of your home.

III.  You may have no equity, little equity, or even negative equity in your house. Maybe you don't really care about your house being foreclosed or couldn't do anything about it even if you did care, then maybe you should consider walking away prior to being evicted. Why do this?  You won't have to be embarrassed with a forced eviction. Here are a couple of options to use in this situation -

Option 9: You can gift the house to an investor (and your problems).   An investor would be in a better position to negotiate short sales with your mortgage lender to make the transaction profitable for themselves. You would have to deed the property over to the investor.  It is extremely important that you consult an attorney before moving forward with this option.

Option 10:  You can offer your mortgage lender the deed to your house in lieu of foreclosure.  Your mortgage lender may be willing to let you "off the hook" for the mortgage loan you owe by turning your house and signing the deed to it over to the mortgage lender.  Be sure that you have an attroney represent you when dealing with the mortgage lender if you choose this option.  This is so the mortgage lender can't come after you later for any shortfall.

There are some methods where you can buy yourself some additional time before your house is foreclosed. Here are a few common options -

A.  You should explore filing for bankruptcy. To many people bankruptcy sounds like an easy way out of their current situation. Bankruptcy is costly and more often then not it fails to resolve anything. You can buy yourself some time but you could end up owing more later. You need to do the math and consult a good bankrupcy attorney before you decide to file for bankruptcy.

B.  If bankrupcy doesn't seem to be the way to go, hire a reliable foreclosure attorney. A foreclosure attorney specializes in foreclosure law and by simply forcing the mortgage lender and the their attorneys to follow the letter of the law, the attorney may be able to buy you several weeks, months, or even years in the house. You want to make sure that you compare the costs and benefits of this action so you don't end up owning more than before you hired the foreclosure attorney.

Finally, always keep in mind that the absolute worst thing you when you receive a foreclosure notice from your mortgage lender is doing nothing. The first thing you should do is mortgage lender to discuss your current situation. If you cannot come to a satisfactory resolution then try everything:

1.  Place your house on the market
2.  Talk to a loan officer about refinancing your house
3.  Discuss your situation with a real estate investor to determine if this relationship will result in a mutually satisfactory resolution

You want to come out of your current financial situation in a little better shape, so work on tightening your financial belt.