Avoiding Foreclosure: What To Do When You Can’t Pay Your Mortgage

Posted by Jeniffer Rodriguez on April 21, 2015
Foreclosure Counseling

Have you found yourself in a position where you are no longer able to make the payment on your mortgage of your home? If that is you, we understand that this may be a very stressful time for you, and that you may be wondering what options are currently available to you as a homeowner in a financially distressed situation.

foreclosure counseling

Right now, we understand that you may be trying to find ways to avoid needing to sell your house in California, fast, so that you can stain your primary residence as long as possible. Fortunately, we have researched thoroughly and found several foreclosure prevention options that, if you qualified for, my help you stop or even prevent the otherwise imminent foreclosure of your property.

Below are 6 options that we think you should look into, that may help to alleviate the burden of your current mortgage payment:

Loan Repayment Plan

If you have only missed a small number of payments, then a loan repayment plan might be the best option for you. In a loan repayment plan you entering into an agreement between you and your lender where your lender adds any back due interest onto the long end your lender gives you a fixed amount of time to repay the loan. If you have missed a very large number of mortgage payments this may not be the best option for you.

Loan Reinstatement

If you feel that your current financial situation is only temporary and not long-term, then a loan reinstatement agreement between you and your lender may be a better option than a loan repayment plan. When your lender agrees to loan reinstatement, they will they will require you to pay any late fees the entire past due amount and any penalties that may have accrued.

Selling Your House

If you’ve already called your lender, spoken with him in detail, and a repayment plan, loan reinstatement, and a short sale are not in your best interest, and selling your house and moving into a short-term living arrangement (e.g. an apartment or town-home or condo) may be in your best interest. Should you decide to sell and use the equity in the property to get back on your feet again, you should first find out how to sell a house fast in 2015.

Short Sale

If you’re fortunate and you have the help of an experienced real estate agent that can negotiate a successful short sale of your property on your behalf. In a short sale transaction, your lender may allow you to sell your house to a retail buyer and forgive the difference between the sales price of the home and your loan balance. Besides not having to pay for any negative equity when selling the house, you may be able to exclude the amount of forgiven debt by your lender to the IRS on your income taxes when you file; This is one of the benefits given to distressed homeowners by the mortgage forgiveness debt relief act that will effect that went into effect in 2007.


Deed in lieu of foreclosure

if you already know that you don’t have very much equity in your home, a deed in lieu of foreclosure might help you quickly get out from under your high mortgage payments, save your credit from the long-term damage effects that a foreclosure would have. In a deed in lieu of foreclosure situation, your lender will let you deed the house into your lender’s name and the remaining debt would essentially be forgiven. In this scenario, you would not be responsible for the remaining debt on your loan for your home, however you will lose any remaining equity that you had in your home at the time that you deed it over to your lender.

Mortgage Forbearance

if you have found yourself in a situation where you only have a temporary reduction of income, then a mortgage for Barents could benefit you greatly. If your lender would agree to a mortgage forbearance, usually based on your income, debt, current financial situation, then you may be able to qualify for a lower monthly payment or a smaller lump sum payment to your lender. Of course, this would only be a shorter-term option because your lender would not agree to terms this lien yet for a long period of time. With a mortgage forbearance agreement in place your lender is giving you the opportunity to get back on your feet, financially, all the while having the ability to continue to live in the home that you’ve worked so hard to pay for.


Loan modification

In many cases, homeowners that are facing financial distress, and know that their financial situation may not change in the short term, they often opt for a permanent loan modification instead of a forbearance or deed in lieu the foreclosure as mentioned above. But what is it about loan modifications that are so attractive? Well, in a loan modification a homeowner that can permanent financial distress could have their interest rate reduced, loan term changed, and/or all miss payments lumped together and added to the back-end of the loan. Lumping all the missed payments and adding them to the back of the loan could significantly help you catch up on your other bills that you may be behind on, by allowing you to make those payments instead of making payments in arrears on your home loan.


Many consider bankruptcy a last resort, and it should be a last resort for most people. Bankruptcy is sometimes thought to be an “easy way out” of an already difficult situation, however many people in financial distress file for bankruptcy without understanding all of the repercussions that are associated with it. Among other negatives in bankruptcy, a person’s credit could be greatly adversely affected for many years and could cause problems with obtaining financing for things like:

  • getting approved for a house
  • getting financed for a new car
  • landing a new job (where the employer checks your credit)


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