Pay off the entire loan including:

• All late fees
• Accrued interest
• Legal fees and costs
• All delinquent payments
• A pre-payment penalty may also apply

Retiring the debt is generally not an option, otherwise the homeowner would not be in distress to begin with; unless if your financial circumstances have changed for the better in acquiring sufficient funds to completely pay off the debt, this may be a viable option.

This option generally requires significant equity in the property.

If this is a viable option refinancing will rectify the default. Typically only 1% will qualify - 99% of distressed homeowners who've received a Notice of Default will not qualify for refinancing.

Should you be fortunate enough to be one of the lucky 1%, a higher interest rate will apply and chances are the new monthly payments will be higher than the previous.

Completely paying the entire delinquency, including:

• All late fees
• Accrued interest
• Legal fees and costs
• Delinquent mortgage payments
• Late property taxes

Similar to option #2 (Retire The Debt). The reality is the homeowner would not be in this situation if they had the financial ability to make the payments.

A negotiated payment relief plan. The default homeowner will undergo a stringent qualification process and approval will depend on their financial situation. Forbearance option may include

• Temporary reduction in monthly payments
• Limited suspension of payments

Once the period of Forbearance concludes successfully, the loan will be reinstated. The homeowner must prove they have the financial resources to resume regular monthly mortgage payments and demonstrate the Reason For Default has been cured.

Essentially, the existing mortgage lender reorganizes the debt structure and / or extends the term of the loan.

A workout option whereby FHA/HUD pays the delinquent amount for up to 12 months of PITI payments.

This should be your last resort option.

Under bankruptcy protection the distressed homeowner will be shunned upon financially for 7-10 years.

The property  is surrendered to the lender in lieu of foreclosure. Generally it is the last resort option for the lender. The lender does not want the property, their financial losses escalate once the property reverts to bank ownership as an REO.

The property must be in good condition and well maintained. Proof is also required that the homeowner cannot afford the payments and there is a verifiable hardship.

A Deed In Lieu will not be accepted if there are junior or additional liens.

If there are insufficient funds from the sale, the homeowner must bring funds to close in order to cover the shortfall.

It's the worst thing a distressed homeowner can do!

You will lose your home.

Foreclosure will irreparably damage your credit score for up to 15 years.

Foreclosure is worse than bankruptcy in terms of detrimentally affecting your credit standing. When applying for credit, lenders will ask if an applicant has ever been through a foreclosure.

Before you even think about doing nothing you must consider the option of a short sale. View the video to the left and I will show you how a short sale will benefit you and your family.

Best of all, all of my real estate services are free.