How to Save your Home from Foreclosure

Foreclosure is the latest real estate “F” word. With numbers on the rise since 2007, foreclosure has become a common occurrence in neighborhoods across the nation from Wall Street to Main Street, USA. Statistics tell us that a frightening number of homeowners in danger of foreclosure do nothing to stop it. For homeowners ashamed and confused about the foreclosure process, the good news is that homeowners do have resources when it comes to saving a home from foreclosure.


Homeowners may be able to refinance an existing mortgage and then use the equity in their home to clear the arrears. This will depend on how many payments the borrower missed and how damaged his or her credit is at the time of application and closing on the refinance.

Repayment Plan

Many lenders will work with homeowners and establish a repayment plan to help him catch up on late or missed payments. The most common repayment plan works by adding a small amount on to the regular monthly payment until the arrears are cleared.

Loan Modification

In this case, the homeowner and lender work together to draft a new loan, often extending the loan term while lowering interest rates and payments to a manageable level. It is noteworthy to point out that mortgage modifications are granted on a case-by-case basis.

HUD Partial Claim

If a homeowner has an FHA loan he or she may be able to receive a payment from the FHA mortgage insurance fund. If eligible, the partial claim pays a portion or all of the late or missed payments in addition to interest payments.


In extreme cases of long-term financial hardship, homeowners have the option to apply for a special forbearance plan. This plan would temporarily suspend or reduce payments if the lender approves the forbearance. There is a lot of paperwork associated with this approval process, but it is a tremendously powerful method to help homeowners stop foreclosure.

Buying Back

If the homeowner’s property is on the foreclosure auction block, the homeowner has the right to bid on the property using cash or a new loan as collateral. If he can win the bid and pay the bill, he saves his house once the auction closes.

Right of Redemption

Some states offer homeowners a right to reclaim their property, even post foreclosure. This is more complicated than stopping the foreclosure before the paperwork goes through, but can be a last ditch option to save a home. Homeowners must consult with an attorney regarding state laws and eligibility for this option, however.

While all of these methods require different amounts of paperwork and all come with various time periods and red tape, they share one common thread; all involve contacting your lender to find out what your options are first. If your lender is not willing to work with you, find your local HUD office and consult with a housing counselor; it’s free and it just might save your most valuable asset.