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As soon as the lender notifies you that you are at risk for foreclosure you will probably ask the question, “How can I stop foreclosure?” You can take action to prevent the total loss of your home and the real estate investment that has been made. You have three options: you can approach the lender about a loan modification, ask the lender to approve a short sale, or you can ask the lender for deferred payment options. All these options need to be considered and one of them pursued before the foreclosure sale takes place. Once the process of foreclosure starts it will be difficult if not impossible to stop.

A mortgage modification takes place when you approach the lender about changing the terms of your mortgage in order to change your payment scale so that they are more affordable. Research all the possibilities and present these to the lender for his approval. If you want to keep your home and you no longer have the income you had before you may ask the lender for lower payment terms. This may mean that the lender lowers your rate of interest or forgives some of the principal. The lender may also choose to lengthen the term of the mortgage to reduce your payments. This type of loan modification process was created to help the borrower get through a financial crisis. If there was a divorce, job loss, or other financial crisis that precipitated the nonpayment periods, then the lender may be willing to work with the home owner. If the financial standing has been altered by a crisis, and the lender feels that the modifications will help with the ability to make regular payments, he may agree to new terms.

Another option is to ask the lender for permission to sell the home for less than the balance that is left on the loan. This is called a short sale. When a home is offered on the market for a reduced price, it will usually attract a buyer for the property. The lender must approve any sale of the property and what happens after the sale will depend on the state you live in. Some states prohibit lenders from pursuing the buyer for the balance of the loan after a short sale has taken place. In other states, the home owner may be required to pay off the balance due after the sale.

If you lost your job and went through all your savings before finding another job, you may have fallen behind in your mortgage payments. You may speak with your lender about obtaining a forbearance on the loan. This means that the lender may agree to give you several months without making payments on your mortgage so that you can get your finances back on track. You will need to write a hardship letter to the lender detailing the financial crisis and how you responded to improve your finances after the crisis passed. The lender will need supporting documents to review with the hardship letter, so include the documentation with the letter.

If you have not been able to accomplish any of the above options to save your home from foreclosure, ask the lender if you can sign over the deed in lieu of foreclosure. This is called a “deed in lieu.” This gives the lender possession of the property without having to go through the legal processes of seizure for nonpayment. The borrower will renounce any claim to the property and the lender will agree not to pursue the debtor for further payments on the mortgage.

This gives you several options if you are asking yourself the question, “How can I stop foreclosure on my house.” You have several options to work with so hopefully one of them will be acceptable for your situation.

Find out more information on foreclosure, please visit Pamm Lee’s site: Do Banks Make Money on Foreclosures and Do I Have to Pay Mortgage Insurance