There are several options available to distressed homeowners other than a short sale. Some of those options are a loan modification, deed in lieu of foreclosure, and several government programs for those who qualify. See below for definitions of each:

Loan Modification:
A process initiated by the homeowner in order to change the terms of the loan with the lenders approval. This may include a decreased interest rate, a short amortization, or a decrease in the loan amount. A hardship must be present in order for the modification to be approved.

Deed in Lieu of Foreclosure:
An arrangement that allows the homeowner to turn over the deed of the house, stopping the foreclosure process and canceling the mortgage debt. This must be approved by the lender and is not very common.

If you are having a tough time making your mortgage payments because you are unemployed, you may be eligible for UP. UP provides a temporary \ reduction or suspension of mortgage payments for at least three months while you seek re-employment.

Eligibility
You may be eligible if you meet all of the following:

• You are unemployed and eligible for unemployment benefits.
• You occupy the house as your primary residence.
• You make your request for help before you’ve missed three payments.
• You have not previously received an UP forbearance or HAMP SM modification.
• You obtained your mortgage on or before January 1, 2009.

Program Availability

• More than 100 HAMP-participating servicers are required to offer UP to eligible unemployed homeowners.
• You may be required to make a partial payment not to exceed 31% of your monthly gross (pre-tax) income including unemployment benefits.
• You will be evaluated for HAMP at the end of your UP forbearance plan.

UP is not currently available for homeowners with mortgages held by Fannie Mae and Freddie Mac; however, both have their own forbearance arrangements for unemployed homeowners.

If you are having a tough time making your mortgage payments for reasons not related to unemployment, you may qualify for HAMP. HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.

Eligibility
You may be eligible to apply if you meet all of the following:

• You occupy the house as your primary residence.
• You obtained your mortgage on or before January 1, 2009.
• You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income.
• You owe up to $729,750 on your home.
• You have a financial hardship and are either delinquent or in danger of falling behind.
• You have sufficient, documented income to support the modified payment.
• You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

If your mortgage payment is unaffordable and you are interested in transitioning to more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA SM. The benefit of a HAFA short sale is that you are no longer responsible for the difference between what you owe on your mortgage and the amount that your home sells for. You will also receive $3,000 in relocation assistance upon successful closing of your short sale.

Eligibility
You may be eligible to apply if you meet all of the following:

• You live in the home or have lived there in the last 12 months.
• You have a documented financial hardship.
• You have not purchased a new house within the last 12 months.
• Your first mortgage is less than $729,750.
• You obtained your mortgage on or before January 1, 2009.
• You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.