How to Stop Foreclosure: 7 Options to Save Your Home (2025 Guide)

Facing foreclosure is terrifying. The stress, the shame, the fear of losing your home—it's overwhelming. But here's the truth: **you have options, and many of them can stop foreclosure in its tracks.**

In this comprehensive guide, we'll cover 7 proven strategies to stop foreclosure, when to use each one, and how to take action today.

Understanding the Foreclosure Timeline

Before we dive into solutions, you need to understand where you are in the foreclosure process. Time is your most valuable asset.

Pre-Foreclosure (Months 1-3)

**You're here if:** You've missed 1-3 mortgage payments but haven't received official foreclosure notice.

**Key point:** You have the MOST options at this stage. Banks prefer to work with you rather than foreclose.

Timeline:

Actions to take NOW:

Foreclosure Initiated (Months 4-6)

**You're here if:** You've received official foreclosure notice (Notice of Default in California, or equivalent in other states).

**Key point:** You still have time, but you must act quickly. Options narrow as you progress.

Timeline:

Actions to take NOW:

Foreclosure Sale Pending (Month 6+)

**You're here if:** Foreclosure auction is scheduled within 30 days.

**Key point:** Options are very limited. You likely need to sell quickly or file bankruptcy to delay.

Timeline:

Actions to take NOW:

---

Option 1: Loan Modification (Reinstatement)

**Best for:** Temporary financial hardship with improving situation

What It Is

Your lender agrees to modify your loan terms to make payments more affordable:

Pros

Cons

When to Use

How to Apply

**Step 1:** Contact your lender's loss mitigation department (not regular customer service).

**Step 2:** Request a loan modification application. You'll need:

**Step 3:** Submit complete application. Incomplete applications are rejected—double-check everything.

**Step 4:** Wait for response (30-60 days). Follow up weekly for status updates.

**Step 5:** If approved, review new terms carefully. Ask:

**Step 6:** Trial period. Most modifications require 3-month trial period of on-time payments.

**Step 7:** Permanent modification. After trial, modification becomes permanent.

Success Tips

Do:

Don't:

State-Specific Notes

**California:** Has strong homeowner protection laws. Use California Homeowner Bill of Rights (HBOR) protections:

**Oregon/Washington:** Less protection than California. Apply ASAP.

**Nevada:** Short judicial process. Move quickly.

---

Option 2: Sell Your House (Before Foreclosure)

**Best for:** Homeowners who want out but need to avoid foreclosure on credit

What It Is

Sell your property before foreclosure completes. Use proceeds to pay off mortgage and avoid foreclosure damage to credit.

Types of Sales

Traditional Sale (30-60 days)

Cash Sale (7-14 days)

Pros

Cons

When to Use

How It Works

**Timeline:** 7-30 days depending on method

Option A: Traditional Sale

1. Contact real estate agent

2. Price competitively (foreclosure auction looms)

3. List property

4. Accept offer quickly

5. Close in 30 days

Challenges:

Option B: Cash Sale (Recommended for Foreclosure)

1. Contact cash buyer

2. Get offer in 24-48 hours

3. Accept offer

4. Close in 7-14 days

5. Use proceeds to pay mortgage

Benefits:

Financial Breakdown

**Example:** $400,000 home, $380,000 mortgage owed

Traditional Sale

Cash Sale

In this scenario, cash sale actually puts money in your pocket despite lower sale price!

Success Tips

Move Fast:

Choose Wisely:

Negotiate Timeline:

State Considerations

**All States:** Can sell anytime before foreclosure auction. Once auctioned, it's too late.

**California:** After Notice of Default (NOD), you have ~120 days before auction. Plenty of time for cash sale.

**Oregon/Washington:** Faster foreclosure process. Act within 60-90 days.

**Nevada:** Very fast foreclosure (non-judicial). Sometimes 90 days start to finish.

---

Option 3: Short Sale (Lender Accepts Less Than Owed)

**Best for:** Underwater homeowners who can't afford to sell

What It Is

You owe more than your home is worth. Lender agrees to accept less than full mortgage payoff.

**Example:** You owe $350,000 but home worth $300,000. Lender accepts $300,000 and forgives $50,000 shortfall.

Pros

Cons

When to Use

How It Works

**Step 1:** Find qualified buyer (or get offer from cash buyer)

**Step 2:** Submit short sale package to lender:

**Step 3:** Lender reviews (30-90 days)

**Step 4:** If approved, close sale

Hardship Letter Tips

Your hardship letter should explain:

Good reasons:

Bad reasons:

Be honest but emphasize genuine hardship.

Tax Implications

**The Issue:** Forgiven debt is normally taxable income.

**Example:** Lender forgives $50,000. IRS treats this as $50,000 income. At 25% tax rate, you owe $12,500 in taxes!

**The Relief:** Mortgage Forgiveness Debt Relief Act

Congress has extended this relief multiple times. As of 2024:

**Consult tax professional!** This is complex and rules change.

Short Sale vs. Foreclosure Credit Impact

Short Sale:

Foreclosure:

Short sale is significantly better for your credit.

---

Option 4: Forbearance Agreement

**Best for:** Temporary hardship with clear end date

What It Is

Lender agrees to pause or reduce your payments for a specific period (usually 3-12 months). After forbearance ends, you resume regular payments plus make up missed payments.

Pros

Cons

When to Use

Types of Forbearance

Reduced Payment Forbearance

Full Payment Forbearance

Special Programs

COVID-19 Forbearance (may still be available):

Check if you still qualify for COVID relief even in 2024—some homeowners still have unused months.

Repayment Methods After Forbearance

When forbearance ends, you must repay missed payments via:

1. Lump Sum Repayment

2. Repayment Plan

3. Loan Modification

4. Partial Claim (FHA loans only)

How to Apply

**Step 1:** Contact lender immediately (don't wait for missed payment)

**Step 2:** Explain temporary hardship

**Step 3:** Request forbearance agreement in writing

**Step 4:** Confirm:

**Step 5:** Get everything in writing before agreeing

Success Tips

Do:

Don't:

State Programs

California:

Oregon:

Washington:

Nevada:

Research state-specific programs—free money to help!

---

Option 5: Refinance Your Mortgage

**Best for:** Homeowners with improved credit/income and existing equity

What It Is

Replace your current mortgage with new loan offering:

Pros

Cons

When to Use

Types of Refinance

1. Rate-and-Term Refinance

Example:

2. Cash-Out Refinance

Example:

Use this cash to:

3. FHA Streamline Refinance

4. VA Interest Rate Reduction Refinance (IRRRL)

Qualification Requirements

Credit Score:

Equity:

Income:

Foreclosure Status:

How to Refinance When Behind on Payments

**Step 1:** Get caught up (if possible)

**Step 2:** Shop multiple lenders

**Step 3:** Get pre-approved (soft credit check first)

**Step 4:** Lock in rate and apply

**Step 5:** Close within 30-45 days

**Step 6:** Use proceeds to cure default

Can't Qualify for Traditional Refinance?

Alternative: Private Lenders

Hard Money Loans:

Use these only if:

Success Tips

Act Fast:

Improve Credit Quickly:

Show Income Stability:

Consider FHA/VA Options:

---

Option 6: Deed in Lieu of Foreclosure

**Best for:** Homeowners with no equity who want to walk away cleanly

What It Is

You voluntarily give the property back to the lender in exchange for:

Pros

Cons

When to Use

How It Works

**Step 1:** Try to sell first

**Step 2:** Contact lender's loss mitigation

**Step 3:** Lender reviews

**Step 4:** If approved, sign deed

**Step 5:** Lender may offer "cash for keys"

What Lenders Look For

Will Accept:

Will Reject:

Negotiation Tips

Leverage:

Request:

Beware:

Credit Impact Comparison

Deed in Lieu:

Foreclosure:

**Difference:** 50-125 points and 1-3 years waiting period!

Tax Implications

Same as short sale:

Example:

State Considerations

California:

Oregon/Washington:

Nevada:

Always get written deficiency waiver regardless of state protections!

---

Option 7: Chapter 13 Bankruptcy

**Best for:** Homeowners who want to keep home and have regular income

What It Is

File Chapter 13 bankruptcy to:

Pros

Cons

When to Use

How Chapter 13 Works

Step 1: File Petition

Step 2: Develop Repayment Plan

Your plan must include:

A. Current Mortgage Payment

B. Arrears Catch-Up

C. Trustee Payment

D. Other Debts

Total Monthly Payment Example:

This is why you need stable income!

Step 3: Confirmation Hearing

Step 4: Make Payments (3-5 Years)

Step 5: Discharge (After 3-5 Years)

The Automatic Stay (Foreclosure Freeze)

When you file Chapter 13:

How long it lasts:

Important:

Can Chapter 13 Strip Second Mortgages?

YES, in some cases!

Lien Stripping Requirements:

1. Home value < first mortgage balance

2. Second mortgage is completely underwater

3. Judge approves lien strip

Example:

Second mortgage is fully underwater (value doesn't cover first). Judge can:

**This is HUGE!** Can save $50,000+ in debt.

Income Requirements

Must have "regular income":

Amount required:

**Typical requirement:** 150-200% of poverty line

What Debts Are Handled?

Priority Debts (100% payback):

Secured Debts (as agreed):

Unsecured Debts (partial payback):

Non-Dischargeable:

Common Mistakes

❌ Don't:

✅ Do:

Cost Breakdown

**Attorney Fees:** $2,500-$5,000

**Filing Fee:** $313

**Credit Counseling:** $50-$100

**Trustee Fees:** ~10% of all payments

**Total Program Cost:** Varies, but attorney and court fees around $3,000-$6,000

After Bankruptcy

Credit Impact:

Buying Another Home:

During Bankruptcy:

When NOT to Use Chapter 13

Don't file if:

Better alternatives may be:

Emergency Filing (Foreclosure in 2-3 Days)

Skeleton Filing:

Used when:

**Warning:** This is last-minute desperation move. Better to act earlier!

---

Choosing the Right Option: Decision Tree

Let me help you choose based on your situation:

Do You Want to KEEP the Home?

YES → Keep Home Options:

Can you afford current payment?

Are you 1-3 months behind?

Is your income improving?

Do You Want to LEAVE/Sell?

NO → Sell/Leave Options:

Do you have equity?

How much time until auction?

Will you owe money after sale?

Are You Deep in Foreclosure?

Auction in 7-14 days:

Already foreclosed:

---

State-Specific Foreclosure Laws

California

**Process:** Non-judicial (most common)

**Timeline:** ~120 days from Notice of Default to auction

**Homeowner Protections:** Strong (Homeowner Bill of Rights)

**Right to Cure:** Yes, up to 5 days before sale

**Deficiency Judgment:** No (on purchase money loans)

**Redemption Period:** No

Key California Law:

Strategies:

Oregon

**Process:** Non-judicial

**Timeline:** ~150 days

**Homeowner Protections:** Moderate

**Right to Cure:** Yes (up to 5 days before sale)

**Deficiency Judgment:** Possible (but limited)

**Redemption Period:** 180 days after sale (if deficiency judgment waived)

Key Oregon Law:

Strategies:

Washington

**Process:** Non-judicial (deed of trust)

**Timeline:** ~120 days from first missed payment

**Homeowner Protections:** Moderate

**Right to Cure:** Yes (up to 11 days before sale)

**Deficiency Judgment:** Possible

**Redemption Period:** No

Key Washington Law:

Strategies:

Nevada

**Process:** Non-judicial (most common)

**Timeline:** As fast as 90 days total

**Homeowner Protections:** Weak

**Right to Cure:** Yes (up to 5 days before sale for first default)

**Deficiency Judgment:** No (on purchase money loans)

**Redemption Period:** No

Key Nevada Law:

Strategies:

---

Taking Action TODAY

You now know your options. Here's what to do right now:

Immediate Actions (Today)

1. Stop the Panic

2. Assess Your Situation

Answer these questions:

3. Contact Your Lender

4. Gather Documents

5. Calculate Your Options

Week 1 Actions

Choose Your Path:

Option A: Keep Home → Apply for Loan Modification

Option B: Sell → Contact Cash Buyers

Option C: Bankruptcy → Consult Attorney

Option D: Deed in Lieu → Contact Lender

Resources

HUD Counseling (FREE):

State Programs:

Legal Aid:

Our Help:

---

Conclusion

Facing foreclosure is terrifying, but you're not helpless. You have seven solid options:

1. **Loan Modification** - Keep home with affordable payment

2. **Sell Your House** - Avoid foreclosure entirely

3. **Short Sale** - If underwater, lender may forgive difference

4. **Forbearance** - Pause payments temporarily

5. **Refinance** - New loan with better terms

6. **Deed in Lieu** - Walk away cleanly

7. **Chapter 13 Bankruptcy** - Last resort to keep home

**The key is acting NOW.** Every day you wait, your options narrow.

If you want to sell quickly and avoid foreclosure, we can help:

Call (530) 488-4242 or submit our quick form for your no-obligation cash offer.

Don't let foreclosure happen. Take control today.