Foreclosure Solutions - 3 Ways to Avoid Foreclosure

The number of home foreclosures in the United States have reached an all-time high. This is probably not news to most homeowners. After all, you hear about it on the news all the time.

But many people are less familiar with the various ways you can avoid having your house foreclosed on in the first place. In reality, there are several foreclosure solutions that homeowners can pursue. Which path you choose will depend upon your unique financial circumstances.

Solutions for Avoiding Foreclosure - Two Flavors

The first thing we must establish is that, generally speaking, there are two paths you might take here. Which path you take will depend on whether your financial problems are only temporary, or if they are more long-term in nature:

• If your financial troubles are short term, then the best foreclosure solution is to avoid foreclosure altogether by getting back on track with your mortgage payments.
• If your financial woes are more long-term, then your foreclosure solution will likely involve selling the house in lieu of having it foreclosed upon, probably through a short sale technique.

In this article, I'd like to talk about the first scenario listed above. Let's use some hypothetical homeowners for this foreclosure solution scenario -- we'll call them John and Jane Doe. In this scenario, John and Jane are merely having temporary financial issues, and these issues have put them behind on their mortgage payments.

But things are now looking up for John and Jane now, from a financial standpoint. So they are eager to get back on top of their mortgage payments and avoid home foreclosure altogether.

The first thing that John and Jane should do (if they haven't already) is get in touch with their mortgage lender. The lender can help them identify a feasible solution for getting caught up on their payments. These are often referred to as mortgage "workout" solutions -- ways to get back on top of your mortgage payments to avoid foreclosure.

So John and Jane have a meeting with their mortgage lender Sally Smith, and Sally explains some of the ways they might be able to get back on track with their mortgage payments. Sally presents the following solutions for foreclosure avoidance:

• Reinstatement -- This is a way to pay off the back payments as a lump sum, usually by a mutually-agreed-upon date in the future.
• Repayment plans -- With this type of solution, you work with the mortgage lender to create a payment plan, through which you will get caught up on your mortgage. Basically, this plan takes the money owed from missed payments and spreads it out over future payments.

With the reinstatement solution, you will pay off your back debt as a lump sum by some future date. With the repayment option, you will pay off your back debt a little at a time, by spreading over your future mortgage payments.

These are just two solutions for avoiding foreclosure on a home. Both of these options apply to situations where the financial problems are only temporary, and the homeowners intend to keep the home. There are other options as well.

So here are the key points to take away from this lesson:

• There are certain foreclosure solutions available to you.
• The path you take will often be determined by the short-term vs. long-term nature of your financial problems.
• Different mortgage lenders will offer different solutions for avoiding foreclosure and getting caught up.
• You should contact your mortgage lender as early as possible to work toward a common solution.
• Mortgage lenders are willing to help -- and would like to avoid foreclosing on the home as much as you'd like to avoid it.

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Learn more about how to stop foreclosure on a home
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