Bring your loan current. Contact your lender, let them know you’re going to get caught up, and you’ll be able to remove the Notice of Trustee’s Sale and your home won’t go to auction. Make sure you and your lender are on the same page, and that you get everything in writing.
Contact your lender and work with them to come to a temporary repayment plan. Keep in mind that this also needs to be in writing. Bank collectors are not friendly people and what comes out of their mouths is usually not true. Forbearance is a temporary solution, and it will ultimately benefit the lender over you, but for now, it may relieve a cash-flow problem.
Find a better deal. The ability to do this hinges on your ability to qualify, and the value of your property. If you owe more than it’s worth, you won’t be able to refinance without bringing the new loan to value ratio within an acceptable range. This will mean coming out of pocket to bridge the gap. Not many people can do this, so it may not be an option for you.
It’s possible, but not likely. Over 60% of those who attempt to modify don’t even qualify. The rest manage to arrange something with the lender, but rest assured, it will be in the banks best interest, not yours. Loan modification doesn’t usually solve the long term problem. Prinicpal modification is extremely rare. Don’t bet on it.
Sell the Property
If your payments are too high, sell the house. If the home is worth more than you owe, you’re going to solve a huge financial burden in your life and you’ll have some cash left over. Most people in this situation don’t think to down-size, but if you have equity in your home, and your income is such that you’re headed towards financial difficulty, sell the house. Downsize and live within your means.
Rent the Property
Renting out your property may be a good option for you, but I would encourage you not to carry unnecessary risk in your life. Renting out, while you’re renting, is a risky proposition because there are costs associated with being a landlord. If you’re in foreclosure, you still need to be current with your lender to stop the auction process.
Even if you owe more than the property is worth, you can sell the home. Most lenders will allow this to avoid the extensive costs of foreclosure. It’s in their best interest to do so, and if you haven’t caught the tone of this message, I’ve been quite clear about the banks. They typically only do what’s in their best interest.
Deed in Lieu
This is when you voluntarily hand over the keys to your house, much like when you voluntarily hand over the keys to your car. The problem with this is that it doesn’t solve the problem. When you hand it over, the bank, who is not in the real estate business, will have to pay the associated costs of selling the house, and that means that every penny that doesn’t cover your loan is a penny they’ll chase after legally.
Stupid. Bankruptcy is something that you should only consider if you’re forced into it. It will slow the process down, but it will not prevent foreclosure.