5 Options When Facing Preforeclosure in 2026

Receiving a notice of default can feel overwhelming, but it's important to know that you still have options. Preforeclosure is not the end — it's a window of opportunity to take action before a foreclosure auction takes place.

1. Reinstatement

If you can come up with the past-due amount plus fees, you can reinstate your mortgage and stop the foreclosure process entirely. This is often the simplest option if you have access to funds — perhaps through family, savings, or a short-term loan.

2. Loan Modification

Contact your lender and ask about loan modification options. Many banks would rather modify your loan terms than go through a costly foreclosure. You may be able to reduce your interest rate, extend your loan term, or add missed payments to the back of the loan.

3. Short Sale

If you owe more than the property is worth, a short sale allows you to sell for less than the mortgage balance with your lender's approval. While this does affect your credit, it's generally less damaging than a full foreclosure.

4. Cash Sale to an Investor

Selling to a cash buyer can be one of the fastest ways to resolve a preforeclosure. Cash buyers can often close in 7-21 days, giving you time to settle your mortgage and potentially walk away with equity. There are no agent commissions and the property is purchased as-is.

5. Deed in Lieu of Foreclosure

In this arrangement, you voluntarily transfer the property title to your lender. While you do lose the property, it avoids the formal foreclosure process and may be less damaging to your credit score. Some lenders may even offer relocation assistance.