You may think that losing your home is inevitable if you have missed a few mortgage payments. Once the lender files a Notice of Default, most people think that the foreclosure process is sure to happen. However, there are several strategies that you can use to stop foreclosure.

Ways to Stop Foreclosure

Keep in mind that foreclosure can be costly to lenders, and they would rather find a reasonable way to work with you than take away your home. If a reasonable workout is not possible, you may be able to use a short sale or a deed in lieu. Bankruptcy is an option in some cases. In the following sections, you will learn how to find legitimate resources and counselors.

Helpful Foreclosure Avoidance Tips

If you are facing the foreclosure process, do not give up. As you remind yourself that there is hope of getting back on track financially, be sure to follow these tips:

  • Face any foreclosure-related problems instead of ignoring them.
  • Respond to all letters or phone calls from the lender.
  • If there are any problems, let the lender know right away.
  • Research and understand your mortgage rights.
  • Understand your options for avoiding foreclosure.
  • Consider utilizing some assets to meet deficiencies, and practice frugal spending habits.
  • Since scams are everywhere, do not work with foreclosure avoidance companies that charge hefty fees for their services.

You can learn about some of your foreclosure rights by reading your mortgage documents. Also, research state laws. Gather information from government or educational sites instead of commercial sites. Do not pay for information. Although there are a few companies that help people who are facing foreclosure, most people cannot afford their fees. The information that you need to potentially get out of foreclosure is free. This is why it is better to spend time doing the work and research yourself.

Government Programs for Avoiding Foreclosure

As you work with any government-provided counseling service, you may encounter several terms. These abbreviations include HAMP, HARP and others. It helps to have a general idea of what they are. Each one is a type of special program to help homeowners who are behind on mortgage payments. This is a summary of the options.

HAMP is designed to reduce your monthly payments. The Home Affordable Modification Program can lower your mortgage payments to about 31% of your gross monthly income. In most cases, HAMP modifications reduce homeowners’ mortgage payments by 40%. This means that if your payment is $2,000, it may become as low as $1,200.

2MP is for HAMP participants who need help. If you already have a HAMP modification and a second mortgage, this program can help reduce your second mortgage through principal reduction or make it affordable through modification. This is a good choice if you are trying unsuccessfully to manage a HELOC, home equity loan or lien. Making Homes Affordable counselors can discuss this option with you.

PRA helps homeowners who have negative equity. If your home is worth less than you owe on your mortgage, this may be a favorable choice. A program consultant will collect information about your home and your mortgage. After that, the goal is to get investors or servicing institutions to reduce your principal.

HARP helps homeowners who have difficulty refinancing. When you are not approved for a regular refinance because of your home’s value, this program can help. The approval requirements are different, and the program is designed to work in your favor. If you are approved, you can get into a new mortgage that is more affordable and stable. The terms and payments depend on your mortgage, credit and other factors.

Federal Resources for Foreclosure Help

There are several ways to get help from the programs in the previous section. You can request assistance in the form of counseling from several government agencies. This is not a fee-based service. You can call to talk to a counselor, and the representative will help you explore your options or refer you to another agency that can better assist you. These are some of the main resources.

U.S. Department of Housing and Urban Development

If you are ready to speak with a housing counselor, this is the best place to start. Most agencies will ultimately refer you here. A HUD-approved counselor can help you explore options and connect you with the right resources for your unique needs. You can visit the site and select your state to get started online.

Making Homes Affordable

If you are new to having difficulties paying your mortgage and are not sure where to start, this is a good site. MHA is a government program that will help answer questions, refer you to a counselor and help you review some of the options from the previous section about government programs.

Consumer Financial Protection Bureau

The CFPB offers advice and assistance with filing complaints. If you may have a complaint, start with this agency. However, most CFPB inquiries are referred to HUD-approved housing counselors.

Homeownership Preservation Foundation

Since there are often scam sites that mimic it, be sure to visit the correct site for this program. The counselors will help you create a more efficient budget and find ways to afford your mortgage. They can also help connect you with other resources and government programs.


NeighborWorks is an organization that helps promote affordable housing and helps communities in need. It connects eligible candidates with grants and other resources. Also, there are counselors who can answer questions or refer you to other reliable organizations that can answer them.

Fannie Mae

If you have a mortgage through Fannie Mae, start by contacting the organization. A representative can help you explore options and discuss policies with you. However, you will likely be referred to a housing counselor from HUD.

If you think that debt reduction may help you get back on track with your mortgage, you can also try credit counseling first. The two government-approved agencies that provide credit counseling or offer referrals are the Department of Justice and the National Foundation for Credit Counseling.

State Resources

Every state has at least one resource for people who are facing foreclosure. Be aware that there are scams at the state level as well. To ensure that you are working with reliable sources, do not turn to any entity that is not approved by your state of residence. HUD offers a page where you can click on your state to see the reputable programs that are available to you. The offerings can vary from one state to another. For example, North Carolina has a program that offers temporary relief for financial hardships. It also has a special program for veterans who are transitioning to civilian life. In Washington, residents have access to free foreclosure avoidance counseling, several financial assistance resources and even mediation services. If you live in a bigger city, there may also be a few local resources available.

Foreclosure Attorneys

One of the best ways to stay protected before or during foreclosure is to hire an attorney who specializes in real estate law. The biggest concern of every person facing foreclosure is money, and hiring a private attorney costs more money. Many foreclosure attorneys charge flat fees, which often vary between $1,500 and $4,000. The fee depends on the attorney’s practice and the complexity of the foreclosure case. While it may be possible to find a private attorney who will work on a pro bono basis, do not count on that. They get many requests and cannot accommodate each one. However, they may select a few low-income individuals to help who are in difficult situations.

If you cannot afford a private attorney, you may also qualify for legal aid. Most states have legal aid programs that provide legal counseling and representation to low-income individuals and families. You can check the government’s Legal Services Corporation site to see if there are legitimate legal aid programs in your area. Be prepared to provide tax and income information when you apply. Fortunately, most people can navigate the foreclosure avoidance process without a private attorney or a free attorney that is provided by a legal aid organization. If your foreclosure case is complex or has other legal issues involved, it is wise to look for an attorney.

Options After Default

When you miss a few payments and fall behind on your mortgage, your loan goes into default. At that point, the bank can try to pursue a foreclosure. These are some options that you can try before the bank takes steps to sell your home.

Negotiate a repayment plan. Contact the lender to see if there are any options for repaying your deficiency over time. Some people fall behind just for a few months and may not be able to make a lump-sum payment to catch up. If this is the case for you, the lender may allow you to repay the deficiency over a span of several months.

Enter into a loan forbearance agreement. This could work in several ways. A lender may allow you to skip payments or pay a reduced amount for several months. You pay back the deficiencies or missed payments periodically later in the repayment term. There may be penalty fees. Another option is to skip or reduce payments for a few months and pay the missed amount in a lump sum after the forbearance period ends.

Try to refinance the loan. Refinancing is a new loan with a lower rate or different terms that may lower your monthly payment. If your credit is decent, you may be able to refinance up until the point of a foreclosure sale. In some states, you may still be able to redeem the home even after the point of foreclosure sale.

As a last resort, consider bankruptcy. Since bankruptcy severely damages your credit for a lengthy time, try to use other options first. A Chapter 13 bankruptcy can help you keep the home if you qualify. You should work with a bankruptcy attorney if you must consider this route.

Use a deed in lieu or a short sale. If you are ready to give up the house and move on instead of keeping it, these options may work. With a deed in lieu, you give up the house to the lender. However, make sure that the lender agrees in writing to not go after you for any deficiencies. A short sale is selling the property for less than what you owe. While you may be able to get the lender to agree to not pursue compensation for a deficiency, you may also face tax penalties for deficiency forgiveness.

If you get a notice that your lender filed a judicial foreclosure, it is important to file a response to the suit to avoid a default judgment in the lender’s favor. When you file a response, it helps to present the arguments that work in your favor. Depending on the details, the judge will order the foreclosure to continue or dismiss the case.

This article is intended to provide guidance for what you can do to avoid foreclosure and should not be mistaken for legal advice.