Option 1:
Loan Forbearance - A strategy worth pursuing is called loan forbearance. The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period. A typical example - You owe $9,000 in back payments, attorneys' fees, etc. Your mortgage company may accept $4,500 now and $750 per month for the next 6 months. Of course, you would have to resume making your normal monthly payments. A loan modification or forbearance is easier to arrange prior to the Mortgage Company filing a foreclosure lawsuit. Some lenders will not consider this after filing, but it's worth trying.

Option 2:
Chapter 13 Bankruptcy - A viable alternative. Filing bankruptcy prior to the auction will stop the sale. Bankruptcy can help eliminate the legal obligation to pay most or some of your debts, easing your financial strain. Furthermore, once you file for bankruptcy, it will prevent your creditor from contacting you. In a Chapter 13 case, you file a "plan" showing how you will pay off some your past-due or current debts over three to five years. At the end of the three to five year period, your remaining debts are discharged, giving you a fresh start. A Chapter 13 Bankruptcy enables you to keep valuable assets like your house or car.

Option 3:
Reinstate Your Mortgage - You have up to and including the morning of the auction to catch up your payments. Perhaps you could borrow from friends or family, credit cards or retirement program. You may be able to arrange a second mortgage to catch up the back payments and fees.

Option 4:
Refinance - You've probably received letters from mortgage brokers and lenders saying you are already pre-approved for a new mortgage. The fact is that is very difficult to arrange new financing when you're already in default on your existing mortgage. Be very cautious about sending advanced fees of $300.00 to $600.00 to lenders or mortgage brokers. Usually it's a ploy to take advantage of your financial situation.

Option 5:
Sell Your Home on the Open Market - Unfortunately, due to the tight time frames involved in foreclosure, this is usually the least viable option available to you to list and close the sale of your home in 21 days for a fair price. However, many investors will be contacting you wanting to purchase your home at deep discounts.