The North Fulton Blog

The remaining alternatives to foreclosure available to homeowners are:

Deed in Lieu of Foreclosure(DIL) - Sometimes referred to as a friendly foreclosure since the homeowner gives back the deed and their rights to the home in exchange for avoiding foreclosure.  The banks avoid the lengthy and costly foreclosure and frequently, they will forego their right to a deficiency judgement.  This will only work where there is one mortgage and there are no other liens on the home.  While this option doesn't carry quite the hard hit to a credit record as a foreclosure, it is usually more severe than a short sale.  There may also be a requirement for the homeowner to try to sell the home for a specified period before the lender will proceed with a deed in lieu of foreclosure.

Bankruptcy - A bankruptcy will usually stop a foreclosure and allow a homeowner to reorganize his debts and keep his property.  The reality is that most of the time this doesn't work out and only stalls the foreclosure.  If the homeowner is not able to make the payments after bankruptcy, the house will be foreclosed on anyway.

Servicemembers Civil Relief Act (SCRA) - This bill was signed into law in 2003 and provides protection to military personnel that are in foreclosure in specific situations.  It can provide temporary relief from paying his mortgage under specific circumstances caused by his military service. 

Short Sale - When a homeowner owes more on his property than it is currently worth, there is an option of pursuing a short sale.  Due to recent and overwhelming market changes, lenders have become much more negotiable in resolving these transactions.  Very simply, a short sale takes place when a lender agrees to accept less than the full balance of the loan at closing.  A buyer closes on the property and it is "sold short". 

That concludes the section on alternatives to a foreclosure.  I will be expanding the discussion on short sales because that is normally the best solution for someone facing foreclosure and it is what I have specifically trained to do.  So please continue to follow the short sale thread in future posts.