Using Home Equity to Prevent Foreclosure
If you are facing foreclosure and you have equity in the property, you have more options than many homeowners in that position and less time than you think. The most important thing on this page is the next paragraph, and it is not about our product.
Why homeowners use equity for this
- HUD-approved housing counseling is free, and counselors negotiate with servicers routinely.
- Servicers have loss-mitigation obligations, and forbearance or modification may be available.
- A homeowner with equity has options — including a controlled sale — that one without does not.
How an equity agreement differs from a loan
A home equity agreement is not a loan. There is no interest rate and no monthly payment. You receive a lump sum today, and in exchange the investor receives a share of your home’s value when the agreement ends — usually when you sell, refinance, or reach the end of the term.
That structure is what makes it suit prevent foreclosure: the money arrives when it is needed, and nothing is added to your monthly outgoings in the period before it starts paying off. It also means the agreement has to be settled in full at the end, and that the share you give up grows if your home does. Both facts deserve equal weight before you sign anything.
Who else is usually involved
Decisions like this are rarely made alone. HUD-approved housing counselors are typically part of the conversation — free to the homeowner, funded independently, and genuinely the right first call. If you are already working with someone, we can work alongside them.
Questions people ask
What should I do first if I am facing foreclosure?
Contact a HUD-approved housing counseling agency. It is free, they negotiate with servicers every day, and they have no product to sell you. You can find one through HUD's directory or by calling the HOPE Hotline. Do this before speaking to anyone who is charging you.
Should I be wary of foreclosure rescue offers?
Very. Foreclosure filings are public records, and homeowners in default are targeted aggressively. Never sign over your deed, never pay large up-front fees for a modification, and be extremely cautious of anyone promising a guaranteed outcome. Legitimate counseling does not cost money.
Does having equity change my options?
Considerably. With meaningful equity you may be able to reinstate the loan, refinance, access equity to clear arrears, or sell in a controlled way and keep the proceeds — rather than losing the equity in a foreclosure sale. The one option to avoid is doing nothing until the sale date.
How much time do I have?
It depends on your state and on whether foreclosure is judicial or non-judicial — timelines range from a few months to well over a year. Find out your specific timeline immediately, because every option narrows as the sale date approaches.