Please note, you would always want to consult with a professional before moving forward with any of these options.

Bankruptcy – This option delays the foreclosure process.

The law prevents any lenders the ability to collect payments that are due while in bankruptcy.
Initially filing for bankruptcy allows the homeowner more time to recover financially.
The homeowner will still have to pay back the money owed. This gives the homeowner, and the lender, time to work out a reasonable payment plan.
It is recommended to consult with a bankruptcy attorney to see if this is a suitable option for prior to this consideration.
It is advised for anyone considering bankruptcy to consult with a Tax Adviser/CPA about potential tax implications, a Financial Consultant about credit ramifications and an Attorney about other potential consequences

Deed in lieu-

This process permits the homeowner to willingly sign the Deed of the home back over to the lender.

This option will have the same impact on the homeowner’s credit as a foreclosure would.
Generally, lenders only permit the acceptance of a Deed in Lieu when the homeowner tried selling their home on the market for several months without any offers.
Lenders will consider this option when there are minimal payments of other loans, and/or the homeowner can prove financial hardship.

Assumption-

Homeowners negotiate a loan modification of their current loan terms to allow another potential buyer to assume the homeowner’s loan.

The homeowner has the opportunity to directly negotiate with the potential buyer to pay the remainder of the mortgage payments.
If successfully approved by their lender the new buyer becomes either:
- The new owner of the home
- A joint owner of the home
Generally speaking, it is uncommon that mortgage documents are written with an assumption clause. Contact your bank to find out of your mortgage terms allow this option.

Lease-

Dependent on mortgage amount and current lease value of the home.

To learn further if foreclosure is right for you, consult with Cesi Pagano and Associates directly.

Options to Avoid Foreclosure