Every day more and more homeowners are faced with the reality that they can’t save their homes from foreclosure. Mortgage default has increased by epidemic proportions throughout the U.S. What happens to those homeowners who are facing a foreclosure but who don’t qualify for the Making Home Affordable program?

According to the Mortgage Bankers Association (MBA), every three months 250,000 families enter into foreclosure in the U.S. That translates into one out of every 200 American homes.

Facing the prospect of a foreclosure is scary and many homeowners tend to ignore the problem, hoping it will just go away. Most homeowners do not choose to go into a foreclosure voluntarily; it is usually the result of a life-changing development.

If a homeowner is unable to be refinanced and is facing a foreclosure, there are other options they can pursue. These options can also help to lessen the impact that a foreclosure would have to a homeowner’s credit score and include:

• Short Sale – this type of sale allows a homeowner to arrange with their mortgage company to sell the home for less than the amount of the mortgage. The mortgage company must approve the short sale request and be willing to accept less than the outstanding balance of the loan as payment in full.
• Deed in Lieu – The mortgage company agrees to allow the homeowner to voluntarily sign the property deed over to the lender. The lender will then sell the property in order to retrieve part of the loan balance owed by the homeowner. The homeowner must vacate the property at the time the documents are signed.
• Cash for Keys – this is a way for homeowners who are facing foreclosure to receive cash in exchange for handing over the keys to the property and for leaving the property in good condition.

Many homeowners are ashamed to talk with someone who can help. During the foreclosure process, the lender offers several stages where the homeowner can become current on their payments before the home is foreclosed upon. Start by working with your lender as soon as you realize you might have a problem to avoid a foreclosure. Mortgage companies want homeowners to keep their homes just as much as homeowners want to keep them. Constant communication is the key to avoiding a foreclosure or other financial difficulty.

For more information, please contact a HUD-approved counseling agency, such as the North Texas Housing Coalition to assist with the mortgage company discussions. Visit them at www.nthcinc.org.