Foreclosure: what happens next, and every option you still have
Written for somebody holding a letter with a date on it. The sequence, the seven ways out, and where to get free advice before you talk to anyone who wants to buy your house.
Call or text or start with your address
What actually happens when you fall behind
The sequence below is the lender's, and it runs roughly the same way everywhere. The gaps between the steps are what changes, and they change by state, by servicer and by whether anybody is answering the phone.
- You miss a payment. A late fee lands and the servicer starts ringing. Nothing has been filed. Almost every option on this page is still open and most of them are cheapest right here.
- The servicer sends a demand. A letter says what you owe and by when. The number is arrears plus fees, not the whole loan. Keep this letter. The date on it is the first real date in the process.
- The loan is accelerated. The lender calls the entire balance due rather than the missed payments. Reinstating gets more expensive from here, and some servicers will still take it.
- It goes legal. Depending on your state this is a court filing or a notice recorded against the property. Either way a clock starts that is published somewhere you can read it.
- A sale date is set. This is the date that matters. A sale of your own that closes before it ends the process, because the loan and the arrears are paid out of the proceeds.
- After the sale. What happens to any shortfall, and whether you can still recover the house, is the part that varies most between states. Ask a counsellor or an attorney rather than the internet.
How long you have depends on how your state runs it
Some states take a lender through a court to foreclose and some do not. That single difference is the biggest factor in how much time sits between the first letter and the sale date, and it is why no honest national page can tell you how long you have.
You can find out for nothing and in one call. A HUD-approved housing counsellor knows how it runs where your house is, and the search for one is linked further down this page. So is the servicer, who has to tell you the date they are working to if you ask in writing.
The date on your letter is the thing to protect. Everything on this page gets easier the further you are from it.
Seven options, and six of them are not us
We buy houses for cash. That is one row on this list and it is not the right row for everybody, so here is the whole list with the person to ask about each. Read it before you ring anyone, including us.
Reinstate the loan
Pay the arrears, the fees and the costs in one go and the loan carries on as before.
Who to ask: Your servicer, in writing. Ask for a reinstatement quote with a good-through date on it.
A repayment plan
The arrears are spread across the next several payments on top of the normal one.
Who to ask: Your servicer. Works when the money problem has already passed.
Forbearance
Payments pause or shrink for an agreed stretch, then you catch up.
Who to ask: Your servicer. Ask what happens at the end before you agree to the start.
A loan modification
The loan itself is rewritten: rate, term, or the arrears folded into the balance.
Who to ask: Your servicer, and a HUD-approved counsellor first. This is the one people most often get wrong on their own.
A short sale
The house sells for less than the balance and the lender agrees to release the lien.
Who to ask: An agent who has closed one before, and your lender. It takes months and the lender has to say yes.
Deed in lieu
You hand the house back by agreement instead of being taken through a sale.
Who to ask: Your servicer. Usually only on the table once the house has been genuinely marketed.
Sell it
The sale pays the loan, the arrears, the fees and the liens, and you keep whatever is left.
Who to ask: Us, or any buyer who can close on your date. This is the one we do.
What selling a house with arrears actually involves
A house with a mortgage on it is sold the same way as any other house. The difference is that more of the money is spoken for before it reaches you, and the order it comes off in is fixed.
The title company asks your servicer for a payoff figure. That one number covers the balance, the missed payments, the late fees and the legal costs run up so far, and it has a date it is good through, because it grows. Anything else recorded against the house comes off next: a contractor who was never paid, a tax bill, a second mortgage, a sibling still on the deed from an estate nobody finished. Then you get what is left.
We put that arithmetic on the offer in writing. A number with no arithmetic behind it is not an offer, it is a guess you are being asked to trust.
Buying since 2016, out of an office at 386 Main Street in Middletown, Connecticut, which is a real address you are welcome to turn up at.
When a sale is the right answer, and when it is not
A sale fits when the house is worth more than the payoff figure, when the sale date is far enough out to close before it, and when you would rather take the equity than keep fighting for the house.
Where one of those is not true, something else on the list above fits better, and we will say so on the call. That costs us a deal today and it is the reason people ring us back later.
There is also a point where the date is close enough that a sale stops being the fastest route. Tell us the date first and we will tell you the same day which side of it you are on, so you spend the remaining time on whichever route can actually still work.
Talk to a housing counsellor before you talk to a buyer
HUD-approved housing counsellors are free, independent, and they will sometimes tell you not to sell. That is exactly why they are the first call.
Find a HUD-approved housing counsellor, by ZIP code, through the Consumer Financial Protection Bureau.
What foreclosure is and how the process works, and what to do if you cannot pay your mortgage, both from the CFPB.
This page is orientation, not legal advice. Foreclosure procedure, any right to recover the house afterwards, and whether a shortfall can be pursued all vary by state and by case. Ask an attorney licensed where the property is.
Selling a house in foreclosure: common questions
Can I sell a house that is already in foreclosure?
Yes, right up until the sale happens. The loan is a lien on the house, not a bar on selling it. At closing the title company requests a payoff figure from your servicer, that figure covers the balance, the arrears, the late fees and the legal costs, and it comes out of the sale proceeds before anything reaches you.
What decides it is the date, not the paperwork. Tell us the date on your letter on the first call and we will tell you the same day whether it leaves enough room.
Will I get anything out of it?
That depends on one subtraction, and you can do it yourself. Take what the house is worth, take off the payoff figure, take off the liens. What is left is what you walk away with.
We show you that arithmetic on the offer rather than handing you a single number, because it is the only way to tell whether our offer is the right answer or whether you should be listing it.
How fast can this close?
You pick the date. The written offer comes within a day of the visit, and after that the work is a title search and whatever notice your state requires. A title search on a house in foreclosure turns up more than usual, because the same months that produced the arrears often produced a contractor's lien or an unpaid tax bill too. Those are normally cleared at closing out of the proceeds.
Does a foreclosure sale cost me anything with you?
You pay no commission and no closing costs, and you leave anything you do not want to take. What we pay is what you receive, and it is on the written offer before you decide anything.
What if I owe more than the house is worth?
Then a straight sale does not clear the loan, and the routes that fit are a short sale, a modification or a deed in lieu. Those are lender decisions rather than ours. Start with a HUD-approved counsellor, free, using the search below.
Do you help with the paperwork?
We buy houses. We are not attorneys, we are not your servicer, and we do not arrange modifications, so on anything about your loan or your rights the honest answer is that a counsellor or an attorney is the right call and it is free to make.
On the sale itself we handle our side: the offer, the title work and the closing, on the date you choose.
Get your cash offer
Put the address in. We come back within a day with a number and the three figures behind it, and then it is yours to do what you like with. Take it to an agent and ask them to beat it if you want.
Takes about a minute. No fee, and nothing to sign to see the number.
Get a fair cash offer on your house
Put the address in and we will come back within a day with a number and the workings. Then it is yours to do what you like with. Take it to an agent and ask them to beat it, sit on it for a month, or ignore it entirely.
You will get Walt or Mary. No call centre, no script, and no pressure to decide anything while you are on the phone.
You are never under any obligation to accept our offer, and we do not pressure anyone. We just want you to do what is best for you, whether you sell to us, sell it to somebody else, or do not sell at all.