Here’s the last installment of Liz Pulliam Weston’s tips for dealing with the possibility of foreclosure:
- Offer a deed in lieu of foreclosure. This is an option if the shortfall between your house’s value and what’s owed on it isn’t too much. The lender can say, “Yeah, I’ll take the deed back, and you won’t owe anything.” It’s similar to solving a disagreement through arbitration instead of going to court: It’s less costly for both parties.
- Negotiate a short sale. If the lender stands to lose a lot of money through a foreclosure, then a short sale may be possible. The lender agrees to release the mortgage for less than what’s owed, and the deed is transferred to a third party.
- Allow the foreclosure to proceed. There may be no other option, and your credit rating will be absolutely trashed for a while, but sometimes it’s not possible to avoid. Foreclosure is never the end of the world, though.