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What alternatives might Florida homeowners have to foreclosure?

Homeowners in Florida sometimes fall on hard financial times through no fault of their own, causing them to fall behind on their mortgage. This can be a very distressing experience, especially if the threat of foreclosure is looming. However, homeowners may have alternatives that can protect them from foreclosure.

If a person's home is worth more than the amount they still owe on it and the person has not yet fallen behind on their mortgage payments, they may want to consider selling their home. While this means they will no longer have the home, it would protect their credit from the negative consequences of foreclosure.

If a person's home is worth less than the amount they owe, they may want to consider a short sale. In a short sale, a person's lender agrees to the sale of a home, even if the sale does not cover the amount still owed. In a short sale, any remaining debt will be forgiven. A lender may agree to a short sale if the homeowner can show that they are experiencing a financial hardship. The lender may also request financial documents supporting the homeowner's financial hardship before agreeing to a short sale.

Finally, there is a deed in lieu of foreclosure. This is a deal in which the homeowner and lender agree that the homeowner will voluntarily give the lender the deed to their home, and the lender will no longer seek payments on the homeowner's mortgage. However, if a person's home is significantly underwater, then the lender may insist that the homeowner pay part of the mortgage before agreeing to a deed in lieu of foreclosure. This alternative to foreclosure may be an option for homeowners who are in a situation of financial hardship, can no longer meet their mortgage obligations, and, after 90 days or more have passed, have not found a buyer willing to pay the fair market value of the home.

In the end, just like homeowners do not want to have their homes foreclosed upon, lenders also want to avoid foreclosure. The foreclosure process can cost lenders a significant amount of money. In fact, since a lender must claim a foreclosed-upon home as a "non-performing asset," the lender will have less money to lend out to other individuals. Therefore, it can be advantageous for all involved to try to pursue alternatives to foreclosure.

Source:, "3 Foreclosure Alternatives: What to Do Before Your Mortgage Goes Underwater," Margaret Heidenry, Sept. 11, 2017

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