Short Sales: Other Options That May be Available

In addition to a formal short sale, a homeowner may be able to pursue other alternative courses of action other than short sale or foreclosure.

Loan Modification: In certain circumstances, the lender may agree to change the terms of the original loan to make the payments more affordable to the homeowner. The interest rate may be lowered or the loan term extended, and missed payments may be allowed to be added to the existing loan balance. The specific terms of a loan modification will be determined by the negotiation between the homeowner and the lender.

Loan Workout: A homeowner that falls behind on payments may have the ability to enter into a repayment plan, forbearance agreement or other payment structure to get the homeowner back on track with monthly payments.

Deed-in-Lieu of Foreclosure: A lender may allow the homeowner to "give back" the property to the lender. Care must be taken by the homeowner to verify that the lender will be prevented from seeking a deficiency after the transactions occurs.

Conclusion: Each alternative contains its own benefits and risks. A homeowner should consult competent professional advice to assess the homeowner's situation and available options.