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Foreclosure Options


The type of mortgage loan an owner has may determine what types of alternatives they may be eligible to pursue. Homeowners facing loan trouble are encouraged to contact their lender and a Housing Counseling Agency to discuss which alternatives they are eligible for, and which one is best for their situation.

Options To Retain The Home:

The following options will result in an owner retaining ownership of their property.

  1. Repayment Plan: This usually involves establishing a schedule with the Lender to make a full regular monthly payment plus a little extra each month, to repay the delinquent amount over a specified period of time.
  2. Special Forbearance Plan: This option may provide for a temporary reduction or suspension of payments, that will be increased at a later point to repay the delinquent amount over a specified period of time.
  3. Mortgage Modification: This option may allow the owner to refinance the debt and / or extend the term of the existing mortgage loan.
  4. HUD Partial Claim: If the loan is an FHA insured loan, the lender may be able to obtain a one time payment from the FHA-Insurance Fund to bring the mortgage loan current with payments.
  5. Refinance: This option may allow the home owner to use the equity that they have established in their home to pay the delinquent amount. Depending on the interest rate of the new loan, the monthly payments might be reduced. Homeowners can explore refinancing with their existing Lender as well as with any Lender of their choice.
  6. Homeowners’ Emergency Mortgage Assistance: This option provides special financial assistance to Pennsylvania residents, including , who are facing the possibility of losing their primary residence through foreclosure. Depending on the Homeowner’s situation, they may be eligible to receive a LOAN to bring their mortgage payments current. Homeowners, depending on their circumstances, may also be eligible to receive financial assistance with their monthly mortgage payment for up to 24 months from the date the mortgage became delinquent.

Options To Dispose Of A Home In :

In situations where the homeowner does not want to retain ownership of the home, the following disposition options may be available as an alternative to Foreclosure. These options affect the owner’s credit rating less than a Foreclosure will.

  1. Sell The Home: If there is sufficient equity in the property, the owner may be able to receive more for their property than what is due on the mortgage loan.
  2. Assumption: With this option, the owner would sign over the property to another person. That person would then take possession of the home, and take over making the payments.
  3. Pre-Foreclosure Sale ( SHORT-SALE): This option may allow the owner to sell their property for an amount less than what is necessary to pay off the mortgage loan. 
  4. Deed In Lieu Of Foreclosure: This option may allow the owner to voluntarily "give back" the property to their Lender without further damaging their credit.

Pennsylvania Housing Finance Agency    HOTLINE  800-342-2397

I.         SHORT SALES will have a negative impact on the owner’s credit similar to a foreclosure for a period of time and will most likely prevent them from obtaining another mortgage at a favorable rate for at least 24 months (based on current Fannie Mae rules).


II.    Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income which could result in the owner owing taxes resulting from the sale of the property and/or the forgiveness of debt by the lender.


III. A lender who accepts a short sale may pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether the loan qualifies for a deficiency judgment or claim.


IV. The SHORT SALE process can be lengthy.  Many lenders will take 4-16 weeks to negotiate and accept a contract and settle.

©2015 Central Penn Multi-List, Inc.. All rights reserved. Information deemed reliable but not guaranteed and should be independently verified.