Below are the most common ways to avoid foreclosure. You should investigate the various options available before committing to one.

• Forbearance. An agreement with the lender that temporarily allows you to delay payment of an amount due. During the forbearance period, you may pay less than the full payment, or even nothing at all. Lenders sometimes consider forbearance when a borrower can prove that funds will be available at a specific date to bring the loan current (e.g., from a bonus, tax refund, inheritance or other source).

• Reinstatement. You agree to pay the delinquent amount in a lump sum at a specific time in the future. A reinstatement is often combined with forbearance.

• Repayment plan. An agreement that gives you a fixed amount of time to repay the past-due amount. Usually the delinquent portion is combined with the regular monthly payment.

• Loan Modification. A written agreement that permanently changes one or more of the original terms of the note, making the payments more affordable. Common loan modifications include:

1. Adding past-due amounts to the existing loan balance
2. Turning an adjustable-rate mortgage into a fixed-rate mortgage
3. Extending the number of years the homeowner has to repay the loan
4. Reducing the interest rate

• Refinance. A new loan to replace the old one. Refinancing requires sufficient income, credit and equity to justify the new loan. Borrowers who cannot pay their current loans rarely qualify for refinancing. Those who do may pay higher-than-normal interest rates. As property values have decreased and loan qualifying criteria have grown more stringent, refinancing has become less viable as an option for distressed homeowners. Non-distressed borrowers can still take advantage of low interest rates to refinance and lower their monthly payments.

• Bankruptcy. This procedure allows your to discharge or reorganize your debts. In some cases, those who file bankruptcy can keep their homes. But often, bankruptcy only delays foreclosure.

• Short sale. A sale in which the lender agrees to accept less than the amount owed as satisfaction of the note. This is often the best option for borrowers in default: They avoid the trauma of foreclosure, and the lender avoids the expense of repossessing and re-selling the property.

• Deed in lieu of foreclosure. You agree to voluntarily transfer title of the property to the lender in exchange for cancellation of the mortgage debt. Often the lender will only consider this option after an attempt to sell the home at fair market value (for at least 90 days). This option is most viable when there are no other liens on the home, such as judgments, second mortgages or tax liens.

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