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What are my alternatives to foreclosure, and which one fits me?

Most homeowners have more than one way out. Forbearance, a repayment plan, a loan modification, or a partial claim can help you keep your home. A short sale, a deed in lieu, or selling before the auction can help you leave on your own terms and protect your money. The right choice depends on your income, your equity, and who owns your loan.

By Guillermo Serafin, broker and owner of Serve First Realty. Updated October 2026.

The options side by side

Seven foreclosure alternatives, what each one means, and when it may fit
Option What it means Keep the home? May fit if
Forbearance Your payments are lowered or paused for a set time. You still owe the missed amount later, and interest may keep adding up. Yes Your money problem is short-term, like a medical leave.
Repayment plan You pay your normal payment plus a part of what you owe each month until you are caught up. Yes You missed a few payments and can now pay a little more for a while.
Loan modification The loan terms change for good, such as a lower rate, a longer term, or missed payments added to the balance. It usually starts with a trial period of a few months. Yes You have steady income but need a lower payment for the long term.
Partial claim (FHA and VA loans) The government pays the missed amount to bring your loan current. You repay it later, when you sell, refinance, or pay off the loan. Yes You have an FHA or VA loan and can afford regular payments again.
Short sale You sell the home for less than you owe, with the lender's approval. No You owe more than the home is worth and cannot afford to keep it.
Deed in lieu of foreclosure You give the home to the lender instead of going through foreclosure. The lender may say no. No You cannot afford the home and do not want to put it on the market.
Selling before the auction You sell the home the normal way, pay off the loans, and keep what is left. No Your home is worth more than you owe.

How do I know if I can keep my home?

Ask yourself one question: once the missed payments are handled, can I afford the payment every month? If yes, the keep-the-home options are worth a try.

  • Start by asking your servicer what they offer. The options depend on who owns or insures your loan, such as FHA, VA, USDA, Fannie Mae, Freddie Mac, or a private lender.
  • Fannie Mae and Freddie Mac loans may also offer a payment deferral. It moves missed payments to the end of the loan, with no interest on that part.
  • Send a complete application early. Applying does not always stop a foreclosure. For covered loans, California's protection generally requires that your servicer receive a complete application at least 5 business days before a scheduled sale, and federal protections may require acting more than 37 days before a sale. Our loan modification checklist shows what to gather.
  • For covered loans, while you keep up with an approved written plan, such as a trial modification, repayment plan, or forbearance, California law generally does not let the foreclosure move forward.

Read our guides for FHA loans, VA loans, USDA loans, and Fannie Mae and Freddie Mac loans.

What if keeping the home is not realistic?

That is not a failure. Leaving on your own terms may give you more control over timing and costs.

  • Selling before the auction may let you receive the money left after paying the loans, other liens and charges, and selling costs. Ask for an estimated closing statement. See how to sell and save your equity.
  • For homes with 1 to 4 units, California law, sometimes called AB 2424, may delay a sale. The trustee must receive a qualifying listing agreement with a California-licensed broker at least 5 business days before the scheduled sale, sent by certified mail or tracked overnight courier, and the home must already be publicly marketed the way the law requires. If every condition is met, the sale cannot happen until at least 45 days after the scheduled date. A second delay is possible only for a fully signed purchase contract that meets strict rules, including a price at least equal to all recorded loans and liens on the home. Each delay can be used only once. Simply listing the home or getting an offer does not delay the sale.
  • A short sale request or offer does not stop a foreclosure. A short sale avoids foreclosure only if the needed approvals are obtained and the sale closes in time. A qualifying short sale of a 1 to 4 unit home that closes under the lender's written approval can protect many borrowers from owing the rest of that loan, but approval alone is not enough, and exceptions apply. One lender's approval does not settle every other loan on the home.
  • The California Attorney General says a short sale or deed in lieu may hurt your credit less than a foreclosure. The Department of Real Estate warns that a future lender may still treat a short sale like a foreclosure.
  • Forgiven debt may be taxed by California even when it is not taxed by the IRS. Read California vs. IRS on forgiven debt.

What should I do next?

  • Call your servicer and ask which options they offer for your loan.
  • Call a free HUD-approved housing counselor at 800-569-4287.
  • Never pay anyone up front to get you a loan modification. California generally prohibits these fees before every promised service is fully done, and a real estate license does not create an exception.
  • Book a free call with us to compare your choices with real numbers. Booking a call does not stop a foreclosure or extend a deadline.

General information, not legal or tax advice. Options and rules depend on your loan and your servicer. Sources: California Civil Code sections 2924.11, 2924f(e), and 2944.7; Code of Civil Procedure section 580e; California Attorney General, "Homeowner Issues: Foreclosure Prevention Options" (oag.ca.gov); California Department of Real Estate, Loan Modification Self-Help Guide (RE 21, May 2020); California Franchise Tax Board, Mortgage Forgiveness Debt Relief.

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IMPORTANT NOTICE

Serve First Realty is not associated with the government, and our service is not approved by the government or your lender.

Even if you accept this offer and use our service, your lender may not agree to change your loan.

Asking for a guide or giving contact permission does not stop foreclosure or extend a deadline.

Not sure which option fits you? Talk to us.

A free call can help you compare your choices side by side.

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