Homeowners who are having trouble paying their mortgages have several options to avoid foreclosure. The homeowners could take advantage of any of these options before or after their lenders file foreclosure complaints. The most frequently chosen option is a repayment or forbearance plan in which the lender consents to refrain from exercising its rights, including filing for foreclosure. While the terms of the plan vary depending on the situation, the homeowner generally resumes payments and pays whatever is past due over a period of time.

Another option is reinstating the mortgage by repaying all of the money owed to bring the account up to date. This might include paying the lender’s lawyer costs and fees along with any accumulated interest and late charges. Participating in the Restoring Stability program in Ohio could provide a homeowner with as much as $25,000 for the reinstatement. On the other hand, the homeowner could pay the mortgage in full if the funds are available, and one method of achieving this is refinancing the mortgage with another lender.

Loan modification is an option that could lower the interest rate or push back the date of the final payment on a mortgage, reducing the monthly payments. The federal Home Affordable Modification Program is available for mortgages that qualify. A final option is filing for bankruptcy to prevent the lender from filing a foreclosure complaint.

Lenders that file foreclosure complaints before the homeowners take action to avoid foreclosure incur additional expenses for the filing and court costs, the title exam and possible lawyer fees. This could affect how much the lenders are willing to work with the homeowners on a new repayment plan, mortgage reinstatement or loan modification.

Source: Ohio State Bar Association, “Before Foreclosure: What You Should Know”, October 29, 2014