Facing Foreclosure: Your Options, Step by Step

What to do first if you are facing foreclosure

The worst move is the most natural one: not opening the mail. Foreclosure is a process with steps and deadlines, and nearly every option below gets harder the longer you wait.

1. Open and keep every letter from your servicer, the company you send your payments to
2. Call the servicer. Explain what happened and ask what options are available. Write down the date, the name of the person, and what they said
3. Call a HUD-approved housing counselor. According to the Consumer Financial Protection Bureau, these counselors can advise you on defaults, forbearances, and foreclosures at little or no cost to you
4. Gather your paperwork: recent mortgage statements, pay stubs or benefit letters, bank statements, tax returns, and a short written explanation of your hardship

This article is general information, not legal or financial advice. Foreclosure rules vary by state, and nothing here can promise a particular result.

How the foreclosure timeline works

You generally have more time than a past-due notice makes it feel. According to the Consumer Financial Protection Bureau, a servicer generally cannot start the foreclosure process until at least 120 days after you become delinquent, except in rare cases.

After that, the pace depends on your state. Some states require the lender to go through a court. Others allow a foreclosure without one, which can move faster. Either way, the process ends at a foreclosure sale date, when the home is sold.

One deadline matters a great deal. The CFPB advises making sure your servicer receives your complete application for help more than 37 days before a scheduled foreclosure sale. If you miss that window, the servicer does not necessarily have to review it. After a complete application, you should hear back in writing within 30 days.

Your options when facing foreclosure: ways to keep the home

Servicers call these loss mitigation options. Which ones you are offered depends on your loan, its investor, and your finances.

A loan modification and forbearance are not the same thing: forbearance postpones what you owe, while a modification changes the loan itself. If the servicer denies a modification, it must tell you why. Bankruptcy can also pause a foreclosure for a time, but it has serious consequences, so talk to a bankruptcy attorney before considering it.

How to avoid foreclosure if you cannot keep the home

Sometimes the payment is simply no longer affordable. You may still be able to avoid foreclosure by leaving on your own terms, which is usually better than a completed foreclosure on your record.

• Sell the home. If it is worth more than you owe, a sale pays off the loan and stops the foreclosure, and any money left after the loan and the costs of the sale are paid is yours
• Short sale. If you owe more than the home is worth, the lender may agree to let you sell for less than the balance. The lender has to approve it. Ask in writing whether you will still owe the difference
• Deed in lieu of foreclosure. You voluntarily transfer the home to the lender. Again, get the terms in writing

Each of these can affect your credit and your taxes differently. A housing counselor, an attorney, and a CPA can help you compare them.

How to sell a house before foreclosure

If you decide to sell your house before foreclosure, time and the payoff amount are the two numbers that matter.

1. Request a payoff statement from your servicer so you know exactly what a sale has to cover
2. Find out your foreclosure sale date, if one has been set
3. Tell the servicer you are selling. Ask whether they will postpone the sale if you have a signed contract. They are not required to
4. Choose how to sell. Listing with an agent can bring a higher price if you have enough time for marketing and a buyer's loan approval. A direct cash sale is faster and less likely to fall through, but a cash offer may come in below a potential retail sale price

Allpoints Moving Services partners with Riv Buys Properties, a family-owned cash property buyer. They provide a written cash offer within 24 hours with no obligation, buy as-is with no repairs, charge no fees and no agent commissions, and can close in as little as 7 days or on the date you choose. They evaluate properties anywhere in the country.

Be clear-eyed about it. A sale solves the problem only if the price covers what you owe, or your lender approves a short sale. Get the offer in writing, compare it with your payoff, and review it with your counselor or attorney. Any legitimate sale closes through a title company or closing attorney, not by signing your deed over to someone at your kitchen table.

How to spot a foreclosure rescue scam

Foreclosure filings are often public record, and homeowners in trouble get targeted. Walk away from anyone who:

• Charges an upfront fee to negotiate with your lender
• Guarantees to stop the foreclosure or promises a specific result
• Tells you to stop talking to your servicer or to send your mortgage payments to them
• Asks you to sign over the deed so they can "save" the house
• Pressures you to sign papers you have not read

Where to get free or low-cost help

• A HUD-approved housing counselor. The CFPB's website has a tool that lists approved agencies by ZIP code. You can also call HUD at (800) 569-4287 to find an agency near you, or call the CFPB at (855) 411-2372 to be connected with a housing counselor
• Legal aid or a foreclosure attorney in your state, especially if a sale date is set or you have been served court papers
• Your county clerk's office, which can explain how foreclosure works where you live

If you do have to move

Moving under pressure is hard, and planning takes some of the weight off. Once you know your date, sort what you are keeping, line up where you are going, and book help early. Our moving checklist breaks the work into steps, and you can request a free quote for a local move with no obligation.

If you sell your property to Riv Buys Properties, your move with Allpoints is complimentary, packing aids included. Ask either team for details, or read about the free move offer.