Avoiding Foreclosure
What options may help me avoid foreclosure?
Options that may help you avoid foreclosure include a repayment plan, forbearance, a loan modification, selling the home, a short sale or a deed in lieu. Each depends on your loan and your servicer’s approval, so ask early.
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Several options may be worth asking about
Several options may help you avoid foreclosure, and the right one depends on your loan, your situation and what your servicer is able to approve. The options most often discussed are a repayment plan, forbearance, a loan modification, selling the home, a short sale and a deed in lieu of foreclosure. None of them is automatic. Each one is something to ask your loan servicer about, ideally with help from a HUD-approved housing counselor, and with an attorney for any legal questions.
This matters because many homeowners assume there is only one way forward, or none at all. In practice, the choices are often wider than they first appear, and they tend to be easier to explore when you start early. Not every option is available for every loan, and the details vary from one servicer to the next. Knowing the names of the options and the questions to ask helps you have a clearer, calmer conversation when you pick up the phone.
Cindy Warner approaches this the way every move is approached: name the problem, weigh the options, build a plan. Cindy is a REALTOR® with eXp Realty serving Windsor and Greater Hartford, not an attorney, a lender or a housing counselor. This article is a plain overview of what to ask about, not advice about your loan. Your servicer decides what it can approve, a HUD-approved housing counselor helps you prepare, and an attorney explains your legal position.
Options that may help you keep the home
A repayment plan is one option to ask about if your situation has improved and you can now handle your regular payment plus something extra. In general terms, it spreads the amount you are behind over a period of time, added to your usual payments. Ask your servicer whether a repayment plan is available for your loan, how the amount would be set and what happens if your situation changes again. Get the terms in writing before you rely on them.
Forbearance is another option to ask about, usually when a hardship is expected to be temporary. In general terms, it may pause or reduce your payments for a period while you recover. It does not make the missed amount disappear, so it is important to ask how that amount would be handled when the forbearance ends. Ask your servicer what forbearance would look like for your loan, and ask a HUD-approved housing counselor to help you understand the terms before you agree.
A loan modification is a change to the terms of your existing loan, and it is something to ask about when your situation has changed for the longer term. What a modification can involve depends entirely on your loan and your servicer’s review. Expect to be asked for paperwork about your income and your hardship. Ask your servicer how a modification review works, what documents it needs and how you will be told the result, and keep copies of everything you send.
Options that involve moving on from the home
Selling the home is an option some homeowners choose when staying no longer fits their goals or their budget. A sale can be a way to resolve the loan on your own terms, as long as the timing and the numbers work with your servicer’s requirements. Before you decide, ask your servicer how a sale would be handled and ask an attorney how it fits the process in your state. If selling becomes the plan, Cindy can help with the real estate side.
A short sale is a sale where the price may not cover the full amount owed on the loan. A short sale needs the lender’s approval, and that approval is never assumed. Ask your servicer whether a short sale is something it would review for your loan, what it would need from you and how long its review usually takes. Ask an attorney and a tax professional what a short sale could mean for you before you move forward with one.
A deed in lieu of foreclosure, in general terms, means transferring the home to the lender instead of going through the foreclosure process. Like every option here, it depends on your loan and requires the servicer’s agreement. It is a significant decision with legal consequences, so it belongs in a conversation with an attorney as well as your servicer. A HUD-approved housing counselor can help you compare it with the other options and prepare the questions you want answered first.
Questions to bring to every option
Whichever option you are considering, a few questions apply every time. Asking them consistently helps you compare the choices side by side rather than reacting to whichever one is mentioned first. Write the answers down, note who gave them and when, and ask for anything important in writing. These questions are a starting point, and a HUD-approved housing counselor may suggest others that fit your situation better.
- Is this option available for my specific loan, and how do I apply
- What documents do you need from me, and where should I send them
- How will I be told the decision, and what happens while it is reviewed
- What does this option require of me afterward, in writing and in detail
Notice that none of these questions asks for a promise. A servicer can explain how an option works and what it needs, but approval depends on your loan and the review. If anyone, inside or outside the process, promises a certain outcome or asks for a fee upfront to arrange one, be wary. Check with a HUD-approved housing counselor or an attorney before you sign anything or pay anyone for help with your mortgage.
A simple map of who to ask
It is easy to feel overwhelmed when several people are involved, so it helps to know in advance who answers which part. The table below is a general map, not a rulebook. Use it to plan your calls and to keep each question with the person best placed to answer it. Your servicer remains the decision maker on every option tied to your loan.
| Option | What to ask | Who to ask |
|---|---|---|
| Repayment plan | Is it available for my loan, and how is it set | Your loan servicer and a housing counselor |
| Forbearance period | How is the paused amount handled when it ends | Your loan servicer and a housing counselor |
| Loan modification | What documents does the review need, and how is it decided | Your loan servicer and a housing counselor |
| Selling or a short sale | How would a sale be handled, and is approval needed | Your servicer, an attorney and Cindy for the sale |
| Deed in lieu | What are the legal consequences, and does the servicer agree | Your loan servicer and an attorney |
If you are unsure where a question belongs, start with a HUD-approved housing counselor. Part of a counselor’s role is helping homeowners understand the options and prepare for the conversation with the servicer. Questions about credit go to the counselor or your servicer, and questions about taxes go to a tax professional. Cindy’s part is limited to the real estate side, which only comes into play if selling becomes part of your plan.
How the process differs between states
Connecticut and Massachusetts each have their own foreclosure process, with steps and notices that follow a set order. Because the details differ, an option that is discussed one way in one state may involve different steps in the other. This article does not describe those rules. An attorney who knows the process in your state can review your loan and your letters and explain how the process, and each option, applies to you.
What is the same everywhere is the value of acting early and staying organized. Open every letter, keep a log of every call, and respond by the dates your servicer gives you. Whether your home is in Windsor, elsewhere in Hartford County or in Hampden County, Massachusetts, the people to call first are the same: your servicer, a HUD-approved housing counselor and, for legal questions, an attorney. Starting with them keeps your options in front of you.
Getting ready for the servicer conversation
Before you call your servicer about any option, spend a little time preparing. A short, organized conversation usually goes further than a long, uncertain one, and it gives you a clearer record afterward. Gather the basics in one place so you can answer questions quickly and focus your attention on understanding what you hear. These are the items worth having in front of you when you call.
- Your loan number and your most recent mortgage statement from the servicer
- Every letter or notice you have received, kept together in date order
- A short written summary of what changed and how your income looks now
- A list of the options you want to ask about and your own goals
If selling the home is one of the options you are weighing, you are welcome to bring that problem to Cindy. There is no pressure and no obligation, just a calm conversation about how a sale in Windsor or Greater Hartford would work, how a pricing conversation based on recent comparable sales fits in, and how the real estate side would line up with your servicer and attorney. Tell Cindy the problem, and you will leave with a clearer plan.
This article is general information about buying, selling and owning homes in Windsor and Greater Hartford. It is not legal, tax, lending, foreclosure or inspection advice and does not predict prices or promise results. Confirm town plans with the Town of Windsor, financing with a licensed lender, mortgage payment problems with your loan servicer and a HUD-approved housing counselor, and legal and tax questions with a qualified attorney or tax professional. Cindy Warner, eXp Realty.
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