The lender may give a fixed amount of time to repay the amount behind, plus any late fees, by adding a portion to the regular monthly payment. This is a good option if you've only missed a few payments.

 

The lender may agree to suspend payments for a period of time. At the end of this time, resume regular monthly payments, and be required to either make one lump sum payment or additional partial payments. This may be a good option if there is a temporary reduction in income.

 

The lender may agree to reduce the interest rate, extend the term of the loan, or add missed payments to the loan balance.

 

Depending on the strength of the housing market, selling may provide funds needed to pay the mortgage debt in full. In a "short sale," the lender allows the sale and agrees to forgive any shortfall between the sale price and the mortgage balance. Still may face a tax liability on the amount of debt forgiven.

 

A voluntary transfer of title to the lender in exchange for cancellation of the remainder of the debt, but will lose any equity in the home and may have to pay taxes on the debt forgiven. A sale or a deed in lieu of foreclosure may be a better alternative than a foreclosure adversely affecting credit.