Foreclosure - the compulsory sale of a home as a consequence of the borrower's failure to make the payments stipulated by the home mortgage contract.
Refinancing - getting a new home loan to replace the original mortgage on a home. This option may involve a change in interest rate, payment terms, or other adjustments. It can be difficult to get another loan for refinancing if you are in foreclosure already, but refinancing is a popular option for those in the early stages of default.
Forbearance - a temporary change in your home mortgage terms, such as monthly payment amount or schedule, to allow you to catch up or improve your financial situation. Your lender must agree to offer you forbearance options and may require that your financial difficulties meet certain stipulations.
Reinstatement - paying all delinquent payments, interest, and fees owed to your lender to bring the mortgage back to a state where you are in accordance with all the mortgage's terms and requirements.
Loan Modification - changing the terms of your mortgage to allow you to make your payments. You and your lender can agree to almost any change, but most often this option involves extending the time period over which the loan must be paid, which lowers each month's payment. Keep in mind that a longer payment term may cost you more in interest and fees over time, however.
Right of Redemption - a point of law in some states that provides a foreclosed homeowner the opportunity to buy back a home after it has been sold at auction by paying the entire balance due on the mortgage as well as any applicable fees.
Short Sale - selling your property before it is foreclosed at a price below the full amount owed on your mortgage. This option avoids official proceedings to foreclose but requires your lender's approval.
Partial Claim - an agreement in which your lender allows you to apply your late payments to the end of your loan term. You must be able to resume the regular payments required by your mortgage.
Deed-in-Lieu - agreeing with your lender that you will return ownership of your property instead of going through the process of foreclosing. A deed-in-lieu is still detrimental to your credit, but it does allow you to avoid official proceedings.
Voluntary Foreclosure - abandoning your property and walking away from your mortgage debt. This act can have serious repercussions including being sued by your lender.
Bankruptcy - taking legal action to declare bankruptcy and stop proceedings to foreclose. Bankruptcy is very detrimental to your credit and may not provide a full resolution, depending upon your situation.
Exploring Your Options
Now that you are aware of some of your options and are familiar with the words you will be hearing, the first step to take is to contact your lender. You have many more alternatives when you start working against foreclosure early in the process. As you consult with your lender, don't be afraid to ask questions and be certain to understand fully the consequences of each action you consider. Make sure that the option you select will protect you for the long term and that you will be able to follow through with the terms of any agreement you make with your lender.