If your mortgage is in pre-foreclosure, if it's been scheduled for auction, or even if your home has been sold, here are some strategies you can use to potentially walk away without losing everything. They are not in any particular order, so be sure to review them all.

If during the short sale, you get less than the remaining balance on your loan, there will be a deficiency. If this happens, it's important to make sure your lender agrees (in writing) to waive the right to sue you later for the remaining deficiency.

You may also want to work with a realtor who specializes in short sales to help you find investors who would be interested in purchasing your property at the best possible price, or your realtor may negotiate with your lender on your behalf to lower the amount they will accept to satisfy the loan.  

• Deed-in-Lieu of Foreclosure (Mortgage Release): With this option, you voluntarily transfer the home title to the lender to satisfy the mortgage debt.
  
  This is often faster than a foreclosure and can be less damaging (even though it still shows) on your credit, sometimes including relocation assistance (up to $7,500 in some cases).
  
  
• Request Hardship Assistance: If you are not able to make your mortgage payment because of things like the loss of a spouse or primary breadwinner, a natural disaster, medial emergency or a job loss (there are more reasons listed in this article), there are hardship programs you may qualify for. Your mortgage lender may not bring up this option, so it's important to do your research to see what you might qualify for. 
  
  In some cases these are options you have to request and some even require that you go through an approval process. It may take time for applications to be approved, you may need to gather documentation of your hardship, or wait for information to be sent to you.
  
  That is why it's important to explore these options by calling your lender as soon as the hardship happens. Apply by contacting your lender (usually your loan servicing department) and ask what programs are available to you. We have a post that covers this in detail and gives you a typical timeline for the foreclosure process. For help, read How to Avoid Foreclosure: A Step-by-Step Guide for Homeowners Falling Behind.
  
  

• Cash for Keys: When a foreclosure sale happens, ownership transfers to the person or company who places the highest bid. They become the new owners of the property. The Cash for Keys option is often offered by the new owners after the sale.  Cash for keys involves a formal agreement where you leave the property in good condition by a specific date in exchange for a cash payment to assist with relocation.
  
  
• Check State Laws: Some states provide redemption periods for the homeowner to pay the remaining balance, and any remaining fees. This option provides a last chance for homeowners to regain ownership of their property after a sheriff's sale or auction.  Redemption periods vary by state, which if this option is available in your area, may give you time to bring your loan up to date, or allow you to stay in the home longer after an auction or foreclosure sale.
   
• Equity Sale: If your home has enough equity, you can sell it on the open market before the auction date to pay off the mortgage, and any fees, keeping the remaining profit.
  
  Use our Home Equity Worksheet to determine how much equity you have and whether this would be your best option. If you have lots of equity and you're not getting a good response from your lender, you might want to consult with an attorney. 
  
  You might want to work with a real estate agent to check to ensure that you have enough time to sell, if your home has been scheduled for auction. 
  
  
• Bankruptcy Filing: Filing for Chapter 13 bankruptcy can trigger an "automatic stay," which instantly stops the foreclosure sale and gives you a chance to catch up on payments over time.
  
  Bankruptcy appears on your credit report and it will come down to figuring out whether the bankruptcy or the foreclosure will be less damaging. This is where consulting an attorney might be the best option.
  
  
• Reinstatement: You can pay the total past due amount, including fees, to the lender to bring the loan current to stop the sale. This is usually allowed up to a few days before the sale.  If you find that you have equity in your home, you might consider this option. 
  
  
• Consult an Asset Recovery Specialist: If your property is scheduled for foreclosure and you have exhausted the previous options, contact us to see if we can help you. 
  
  Believe it or not, even if your property has been sold at auction, you may still have options. Schedule a free consultation so that our asset recovery specialists can help you determine where you stand and possibly help you recover funds or enter into a cash for keys agreement at no upfront cost to you.