Forbearance – an agreement with the lender that temporarily allows the homeowner to pay less than the full amount of their mortgage payment, or perhaps even nothing at all, during the “forbearance period.” Lenders might consider forbearance when you can prove to them that funds from a bonus, tax refund or other source will bring the homeowner’s mortgage payments current at a specific date in the future.

Reinstatement – occurs when the homeowner pays the lender the total amount they are behind in a lump sum, by a specific time in the future. A reinstatement is often combined with forbearance.

Repayment plan – is an agreement with the lender that gives the homeowner a fixed amount of time to repay the amount they are behind. They do this by combining the homeowner’s delinquent portion along with their regular monthly payment. At the end of the repayment period, the homeowner has paid back the delinquent mortgage and is now current.

Loan modification – is a written agreement between the lender and the homeowner that permanently changes one or more of the original terms of the note. This makes the payments more affordable. Common loan modifications include:

1. Adding missed payments on top of the existing loan balance
2. Turning an adjustable-rate mortgage into a fixed-rate mortgage
3. Extending the number of years the homeowner has to repay the loan

Refinance – Refinancing requires income, credit and equity to support a new mortgage or deed of trust. If your current income cannot pay your present mortgage, it may be difficult to convince another lender to offer you a loan with a reasonable interest rate. Based upon the tightening of qualifying criteria for loan applications, refinancing in today’s market is becoming less and less of a viable option. It goes without saying that the only reason to refinance is to lower your monthly payment.

Short-Refi – This is the latest trend for lenders in working with delinquent borrowers to avoid foreclosure. The lender agrees to refinance the home with a reduction in the principal balance. Sometimes the lender will also reduce the interest rate as well on the new loan. The borrower needs to provide proof of a “hardship” and fully document the ability to pay the new mortgage.

Bankruptcy – A bankruptcy may allow the homeowner to discharge some debt and reorganize others to keep the property. However, if a homeowner doesn’t or can’t make the house payment after the bankruptcy, the home is foreclosed on anyway. It is not recommend for real estate agents to list the property and try to negotiate a short sale while the homeowner is going through this process. Homeowners need to seek legal counsel if they want to pursue this option.

Short Sale – If the sale proceeds are less than the total amount owed to the lender, the lender(s) may agree to a short payoff or “short sale” and write off the portion of homeowner’s mortgage that exceeds the net proceeds from the sale.

Deed-in-lieu of Foreclosure – If the homeowner agrees to voluntarily transfer title of the property to the lender in exchange for cancellation of their mortgage debt, the lender may agree to a deed-in-lieu of foreclosure. In most cases though, the homeowner must attempt to sell the home for its fair market value first (at least 90 days before a lender will consider this option).  This option might not be available if there are other liens on the home, such as judgments, second mortgages or tax liens.