1. Reinstatement of the loan.  This means you bring the loan current by paying all the payments, legal fees, late charges and other fees.

2. Payoff the loan in full.   It may not be a realistic option for many, but it is an option.

3. Deed-in-Lieu of foreclosure.  This means that you hand over the property to the bank.  The bank may not be interested in this one unless the property is worth more than what you currently owe.  The advice of a foreclosure attorney would be a great idea to check in with on this idea.

4. Sell the property.  If your home is worth more than what you owe the bank, then this can be a good option.  If your house is not worth more than what you owe, then you might be able to get the bank to agree to a short sale.  In a short sale, the bank agrees to take less money than what is owed.  If you want to stop foreclosure using this option, you will need to make sure you have a good realtor that understands and knows the short sale process.

5.  File bankruptcy.  A Chapter 13 bankruptcy is basically a reorganization of your debts.  It can temporarily stop foreclosure and can typically involve setting up a 3 to 5 year plan to repay lenders.  This can be a good option if you are having problems meeting all of your debts.  You will need to advice and service of a bankruptcy attorney with this option.

6. Renegotiate with the lender. This is one option before foreclosure.  Most banks will try to work with you and allow the bank to negotiate putting the loan bank in service.  It could mean reducing payments, forbearance (temporarily stop making payments) or modifying loan terms.

Try not to rule anything out if you are going through foreclosure.  Use your judgment and contact a professional to help with your next steps.

As banks try to off load these homes, they are slashing prices to bring in many buyers and multiple offers, creating bidding wars.  Be prepared giving your highest and best offer the first round of offers to avoid a counter offer from the bank with multiple participating parties.  The prices could be pushed further up.

There are some important things to be aware of when buying a bank owned REO:

• The home is usually conveyed “as-is” – the bank will not make any repairs, the seller will make no warranty to the buyer, expressed or implied as to the condition of the house, fitness of the property.
• The seller is still to disclose any material fact, but since the bank has not lived in the home, there will be no sellers property disclosures or CLUE report to show of any insurance claims on the property.
• Regarding the appraisal-a failed appraisal based on the condition of the home (missing A/C, mold, missing appliances, etc.) will not allow the buyer to cancel to get their earnest money back.  The as-is addendum overrides the contract, that includes an appraisal contingency.   If the appraisal comes in low,the buyer cannot use the appraisal contingency.  It is imparitive that the appraisal be done in the 10 day inspection period.  If 10 days is not long enough, extend the inspection period when you submit a contract.
• Another concern is the utilities being turned off – it can take a day or two to get them back on.

If you are buying, do your homework and make sure you have a good agent that has your best interest in mind.

Fees include:

• Missed Payments and Interest
• Administrative Fees totally $10 to 15K for going into default
• Auction will total about $15,000
• If nobody bids 90% of the appraised price, they will end up owning the property at Auction.
• If the bank now owns the property, they need to hire a listing agent to sell the property
• During the listing, the banks loses money each month owning the property

If you cannot afford making your payments, typically banks will work with you and be accomodating if you tell them what is happening to your finances.  They do not want to foreclose.