If your mortgage is behind and you want to know how to get your home out of foreclosure, the clock and the paperwork are on your side longer than most people think. Federal law gives you at least 120 days from your first missed payment before the servicer can file anything, and submitting a complete loss mitigation application during that window forces the servicer to stop and evaluate your case before moving ahead.1Consumer Financial Protection Bureau. 12 CFR 1024.41 Loss Mitigation Procedures Your job in the next few weeks is to use that time: figure out where you stand, apply for the right workout option, and pick the path that matches whether your hardship is temporary or permanent.
Act Within the 120-Day Window
Two federal rules do most of the heavy lifting. First, under Regulation X, your servicer cannot file the first foreclosure notice or document until your loan is more than 120 days delinquent, measured from your first missed payment rather than from any letter you received. Second, the ban on “dual tracking” means that if you submit a complete loss mitigation application before the first foreclosure filing, the servicer cannot file at all until it reviews your application, offers whatever you qualify for, and lets you accept, reject, or appeal.2eCFR. 12 CFR 1024.41 Loss Mitigation Procedures If foreclosure proceedings have already started, a complete application submitted more than 37 days before a scheduled sale blocks that sale until the review plays out. Once an application is complete, the servicer has 30 days to evaluate you for every available option and send a written decision.
Everything in those protections turns on the word “complete.” An incomplete application doesn’t trigger the pause, and the servicer can keep moving while you scramble for the missing document. Get your application in early, and get it in whole.
Read Every Notice You’ve Received
Pull out every piece of mail from your servicer and sort it by date. Two documents matter most. A Notice of Default lists how many payments you’ve missed, the total needed to get current, and a deadline — commonly 30 days or longer depending on your state — to pay it. An Acceleration Letter is more serious: the servicer is demanding the entire remaining loan balance, not just the arrears, and is moving toward foreclosure.
Which notices you’ve received tells you how far along the process is and which options are still open. Still inside the 120-day pre-foreclosure window, you have the most flexibility. Past a foreclosure filing, you still have options, but the deadlines tighten. Write down every date on every notice. Missing one can close a door permanently.
Call the Loss Mitigation Department
Your first call goes to the servicer’s loss mitigation department, not the general customer service line. The number is on your mortgage statement or the servicer’s website. Before dialing, gather your loan number, recent pay stubs or other proof of income, a list of monthly expenses, and a short explanation of why you fell behind. Ask for the representative’s name and direct line so you don’t restart from zero on the next call.
Say plainly that you want to apply for loss mitigation and ask exactly which documents are needed for a complete application. Most servicers will want recent tax returns, bank statements, a hardship letter, and proof of current income. Send everything the servicer asks for, keep copies, and follow up in writing when you can. Applications most often stall because a borrower didn’t send a requested document and the servicer quietly closed the file.
Options If You Want to Keep the Home
Four tools run through the servicer. Which one fits depends on how much cash you can put in now and what your income looks like going forward.
Reinstatement
Reinstatement is the simplest: pay the full past-due amount in one lump sum, including missed payments, late fees, and any legal costs the servicer has already incurred. Once paid, the loan is current and foreclosure stops. This works when you’ve come into money — a bonus, insurance payout, family gift, or proceeds from selling another asset. Call the servicer and get the exact reinstatement amount in writing, because the number moves daily as fees and interest accrue.
Repayment Plan
A repayment plan spreads the past-due amount over several months by adding a slice of the arrears on top of your regular payment.3Consumer Financial Protection Bureau. What Is a Repayment Plan on a Mortgage Miss three payments of $1,500, and the servicer might add $750 a month for six months until you catch up. This fits a borrower who hit a rough patch and is now earning steady income. The servicer will want proof you can handle the higher payment.
Forbearance
Forbearance temporarily pauses or reduces your payments while you get back on your feet.4Consumer Financial Protection Bureau. What Is Mortgage Forbearance Interest usually keeps accruing, so your balance grows even as you pay less.
The question that matters is what happens when forbearance ends. For most loans, the servicer cannot demand that you repay everything missed in one lump sum.5Consumer Financial Protection Bureau. Every Homeowner Has Options for Coming Out of Mortgage Forbearance You should have options such as a repayment plan, a loan modification, or a payment deferral that moves the arrears to the end of the loan. If the servicer only mentions lump-sum repayment, ask specifically about alternatives.
Loan Modification
A loan modification permanently changes your mortgage terms. The servicer might lower the interest rate, stretch the loan from 20 years to 30 or 40, move past-due amounts to the end, or in some cases cut the principal. This is often the best long-term fix when your income has dropped and isn’t coming back. You submit tax returns, bank statements, pay stubs, and a hardship letter, then wait while underwriting evaluates what you qualify for. Modifications can take months. Respond to every document request immediately and keep copies of everything.
Options If You Can’t Afford to Stay
If the numbers simply don’t work even with modified terms, a controlled exit is far better than letting foreclosure run its course. Both options below cause less credit damage than a completed foreclosure and can limit your remaining financial exposure.
Short Sale
In a short sale, you sell the home for less than the loan balance and the servicer agrees to accept the proceeds as satisfaction, in full or in part, of the debt.6Consumer Financial Protection Bureau. What Is a Short Sale? You need the servicer’s approval before listing, and the process requires financial documents, a hardship letter, and eventually a purchase contract.
Watch the deficiency. In many states, the servicer can sue you later for the gap between the sale price and what you owed. Ask the servicer to waive the deficiency balance in writing before you agree to the sale. Without that written waiver, you can lose the house and still owe tens of thousands of dollars.
Deed in Lieu of Foreclosure
A deed in lieu means you voluntarily transfer ownership back to the servicer, and in return the servicer cancels the foreclosure.7Consumer Financial Protection Bureau. What Is a Deed-in-Lieu of Foreclosure It avoids the public auction and typically causes less credit damage than a completed foreclosure. Servicers usually require the property to be in reasonable condition and free of other liens. As with a short sale, ask for a written release from any remaining balance.
Chapter 13 as an Emergency Stop
Filing Chapter 13 bankruptcy triggers an automatic stay that immediately halts foreclosure, wage garnishments, and most other collection activity.8United States Courts. Chapter 13 Bankruptcy Basics Under a Chapter 13 plan, you propose a three-to-five-year schedule to catch up on arrears while making your regular monthly payments going forward. A judge must approve the plan, and you need consistent income to fund it.
It isn’t a magic fix. If you fall behind on the confirmed plan, the servicer can ask the court to lift the stay and resume foreclosure. Bankruptcy also sits on your credit report for years. Treat it as a last resort, and work with an attorney who files these cases regularly.
Taxes, Deficiency, and Credit After the Dust Settles
When a servicer forgives part of your debt — through a short sale, deed in lieu, modification with principal reduction, or foreclosure — the IRS generally treats the forgiven amount as taxable income. You’ll receive Form 1099-C and are expected to report the canceled debt for the year it was canceled.9Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not? The Mortgage Forgiveness Debt Relief Act, which excluded up to $750,000 of forgiven mortgage debt on a primary residence, expired on December 31, 2025, and as of this writing has not been renewed for 2026.10Internal Revenue Service. Publication 4681 (2025), Canceled Debts, Foreclosures, Repossessions, and Abandonments An insolvency exception may still apply if your debts exceeded your assets right before the cancellation.11Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness Talk to a tax professional before you file.
Deficiency judgments are the other after-the-fact risk. If the home sells at foreclosure for less than you owed, many states allow the servicer to sue for the gap, and the same risk follows a short sale without a written waiver. State rules vary widely: some states ban deficiency judgments outright, some allow them only after judicial foreclosure, and some cap them at the gap between the debt and the home’s fair market value. Find out what your state does before you choose a path.
Credit effects run on a long clock. A completed foreclosure stays on your credit report for seven years from the foreclosure date and typically drops your score by well over 100 points, with the worst damage in the first two years.12Consumer Financial Protection Bureau. If I Lose My Home to Foreclosure, Can I Ever Buy a Home Again? A short sale or deed in lieu also hurts, but most future lenders view them more favorably than a completed foreclosure. A modification that keeps you current does the least damage of all.
Free Help, and Scams to Avoid
HUD-approved housing counseling agencies offer free or low-cost foreclosure prevention counseling.13Consumer Financial Protection Bureau. Find a Housing Counselor A counselor can explain your options, organize your paperwork, and talk to the servicer with you. Call the HUD housing counseling hotline at 800-569-4287 or search the CFPB’s housing counselor tool.14U.S. Department of Housing and Urban Development. Housing Counseling For legal help, contact your local legal aid office or your state bar’s lawyer referral service. Many legal aid programs handle foreclosure cases at no cost for qualifying homeowners, and an attorney can review your loan documents for servicer violations and advise on bankruptcy.
Homeowners in foreclosure are heavily targeted by scammers. The FDIC flags several warning signs of a fraudulent operation.15FDIC. Beware of Foreclosure Rescue Scams
- Upfront fees. No legitimate foreclosure prevention service charges before providing help.
- Instructions to stop paying your mortgage. The scammer wants your payments redirected to them.
- Pressure to cut off your lender or counselor. Isolation is the control tactic.
- Requests to transfer your property title. Once you sign the deed over, the house is gone.
- Documents with blank spaces. Those lines get filled in later with terms you never agreed to.
Report suspected fraud to the FTC at ReportFraud.ftc.gov, even if you didn’t lose money.16Federal Trade Commission. ReportFraud.ftc.gov FAQ Real help is available for free through the channels above.