The foreclosure process was started on over 90,000 homes in 2021. This may sound like a lot of houses being repossessed but in comparison to previous years’ figures, it is a mere fraction of those foreclosures.

At the end of 2020, the COVID-19 Emergency Eviction and Foreclosure Act became law. This helped limit the number of properties being foreclosed throughout 2021. Unfortunately, the moratorium on foreclosures came to a close in January this year.

This resulted in the first quarter of 2022 seeing a post-pandemic high of foreclosures in the US. Now that there is less protection in place, many people who struggled financially during the pandemic are in danger of losing their homes.

If you are staring at foreclosure what can you do?

What can you do when facing foreclosure?

Fortunately, foreclosures are well below normal levels currently. However, that may not last long. March’s foreclosure figures were 181% higher than the previous year with every month seeing a year-on-year increase.

While it is unlikely that levels will rise to those of 2009 and 2010, these increases in foreclosures are worrying for any individual or family that is facing financial distress.

Back in 2009 and 2010, the Great Recession and the property crash helped see record levels of foreclosures. Nearly 3 million homes had the foreclosure process started on them in both of those years. This equates to about 1 in 49 properties across the states.

While these numbers are troublesome, there are steps a homeowner can take to avoid or stop the foreclosure process. 

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Ignore the problem and wish it away

Surprisingly, many people do choose this option in the futile hope that some miracle may transpire. Ignoring the problem is akin to burying your head in the sand. It will result almost certainly in you losing your home and having your credit score damaged for the foreseeable future.

Sell your home for cash

One option to avoid the damage that foreclosure can do to your credit rating is to sell the home for cash. This route will not suit everyone and is best taken after unhurried consideration of all the alternatives.

This PDX Renovations foreclosure article explains the process of selling to a home investor for a quick cash sale. The benefits of taking this route are that you could pay off your current mortgage, and in certain circumstances, have some money left over from the sale.

You can sell a home at any time during the foreclosure process up until the auction date. However, if you are planning to make a short sale you will need your lender’s permission.

A short sale is when the proceeds from selling the property will be less than the outstanding debt. You must consult and receive a written agreement from your mortgage lender before making any sale.

Reinstate your loan

This option is only viable if you have liquid assets to hand that will cover all of the outstanding payments plus any interest or fees that are due. However, if you can acquire the amount due then the loan will be reinstated and foreclosure avoided.

File for bankruptcy

Bankruptcy should not be undertaken without discussing the consequences with a lawyer specializing in this area. Under certain circumstances, you may be able to keep your home after filing for bankruptcy, but you may only be delaying the foreclosure.

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Understanding debt is important when considering your options when facing foreclosure. But, filing for bankruptcy is usually the last resort.

Take out a new mortgage

Mortgage redemption is something that all homeowners desire. This is when a mortgage is fully paid off and there are no outstanding debts.

In the case of foreclosure, the right of redemption can be used to stop the process. To do this you would have to pay off the full amount of the outstanding loan. The most likely way to do this would be to find a different lender to provide a new mortgage secured against your home.

You should already be aware of how long it takes to get a mortgage, but you might not understand the foreclosure process. Time is on your side here. The foreclosure process cannot be started usually until you are 120 days in default. Refinancing can be arranged much quicker.

In most cases, this will only work if your credit score hasn’t already been adversely affected.

Ask for a repayment plan or forbearance agreement

Two options that can help you to keep your home are to change the payments you are making or in some cases, freeze them temporarily.

A repayment plan can be put into place if your lender agrees, and this allows you to pay your outstanding amounts by increasing your monthly payments. This can work for someone who has found themselves financially stable after a difficult period.

A forbearance agreement is similar to a repayment plan but this will let you make reduced payments over a set period. This can be useful if your financial problem is temporary and you will be able to make higher payments in the future to catch up. In some cases, the lender may even freeze payments for a set period. 

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What happens when you cease making mortgage payments?

If the process is completed, a foreclosure remains on your credit report for seven years. The clock starts from the time you miss your first mortgage payment and will be recorded by all three big credit agencies including Experian.

Therefore, it is important to understand how the foreclosure process and defaulting on a mortgage can affect you. But, when you miss your first mortgage payment, your lender has certain responsibilities they have to undertake too.

No later than 36 days after your first missed payment the lender must contact you. This is called loss mitigation and is a process put in place to try and avoid foreclosure.

They must then follow this up with a written explanation of all your options. If you haven’t already started to find a way to avoid foreclosure, now is the time to do so.

If you continue to be in default you will receive a breach letter. This will outline what you need to do to reinstate the loan, and when you need to comply.

Finally, if nothing has been resolved you should receive a notice of foreclosure. This is vital to the foreclosure process and may come in one of three forms. You should receive either a judicial foreclosure notice, a notice of sale, or a notice of default.

If you don’t receive one of these you may have a defense against foreclosure. The lender may have to start the process again which could buy you time to find a solution.


Many lenders would like to avoid the foreclosure process as much as the borrower would. So, the first thing that should be undertaken is to speak to your lender about your options.

Your lender may assist with forbearance, a repayment plan, or a loan modification. If your goal isn’t to stay in the home but just to avoid foreclosure then a cash or short sale may be better options.

The one thing you must avoid is ignoring the problem until you are evicted. Speak to your lender, and start positive action.


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