Foreclosure Alternatives

Take the First Step to Regain Control of Your Life

Many Americans face a difficult decision. They have fallen behind on their mortgage payments, owe more on their homes than they are worth, and may be ineligible to refinance or modify their mortgage. Foreclosure may appear inevitable, but it doesn't have to be. The opportunity for a fresh start may exist.

PennyMac is not a bank. We are a mortgage lender and loan servicer specializing in foreclosure alternatives. Our mission is to help homeowners find the best solution given their current financial situation. Sometimes that includes staying in their home and other times it means they'll need to identify the next best option.

Don't Wait — Explore all your options

When borrowers are unable to make their required loan payments, foreclosure is the final action a mortgage company will pursue to recover its losses on the loan due to lack of payments or other defaults on the loan. Since foreclosure can seriously damage your credit, you should explore all other options. The first step is to contact your lender. Programs are available that may enable you to modify your loan to make your payments more affordable so you can stay in your home. However, everyone’s situation is different. Sometimes the best alternative for your financial future is to start fresh in a more affordable home.

If we are unable to modify your loan, and you simply cannot afford the mortgage payments, two alternatives are a Short Sale and a Deed-in-Lieu. Either of these options may allow you to re-establish your credit sooner than if your property were to go through foreclosure. Here is a brief explanation of each:

Short Sale: The mortgage company allows you to sell the property for fair market value and use the proceeds to satisfy the mortgage, even if the home sells for less than what you owe, and in most instances, you won’t have to repay any remaining balance.

Deed in Lieu: You can voluntarily transfer ownership of your home to the mortgage company, and in most instances, you won’t have to pay anything more towards your loan.

If you are a PennyMac customer who needs assistance, please call us at (888) 870-6328 today. Our Resolution Specialists can review each option in detail with you, so you can determine your best option. Because the short sale and deed in lieu options require you to move from your home, PennyMac may be able to offer you relocation assistance to help cover the costs associated with finding and moving to a new home. But don't wait — the amount of money available to you decreases with time as the costs associated with the foreclosure increase. Making the phone call will allow you to pursue the option that best fits your financial situation.


Many people have the misconception that the lender wants to take back your home through foreclosure. Untrue — the lender is most interested in ensuring that mortgage payments are made each month. Lenders only begin foreclosure when every other option to cure the default has failed. Foreclosure is the legal means your lender can use to repossess your home. You should avoid foreclosure, if at all possible. Many states require the lender to go to court to foreclose. In some states, the lender is required to file a lawsuit against the borrower. The lender must give public notice of foreclosure proceedings. Notice often occurs in a local newspaper.

What to Do Right Now if You are Delinquent

  1. Do not ignore letters and calls from PennyMac. If you're having problems making your payments, call or write immediately. Explain your situation. Be prepared to provide financial information, such as your monthly income and expenses. Without this information, we may not be able to help.
  2. Let us know as early as you can that you're having difficulty making payments. Our ability to help often declines with each missed payment.
  3. Stay in your house for now. Abandoning your property could make it harder for you to qualify for programs meant to help you.
  4. Beware of scams. Scam artists try to exploit struggling homeowners. Beware of anyone who wants to charge you a fee to help modify your loan or provide counseling. Look out for people who pressure you to sign papers quickly or tell you they can save your home if you transfer the deed over to them.


The U.S. Department of Housing and Urban Development (HUD) funds housing counseling agencies throughout the country. These organizations can give you advice on renting, defaults, foreclosures, credit issues and more. To contact the agency nearest you, call (800) 569-4287 or visit

Speak with a Friendly Loan Resolution Specialist

Call a Loan Specialist (866) 545-9070

Hours (PST) Monday - Friday 6 a.m. - 6 p.m.
Saturday 7 a.m. - 11 a.m.

Foreclosure Alternatives
Foreclosure Alternatives
Short Sales

A Short Sale occurs when your mortgage servicer agrees to accept less from the sale of your home than what you actually owe on your mortgage loan. In order for your mortgage servicer to agree to this type of sale, you must be delinquent on your mortgage payments and be willing to move to a more affordable home. When you have a Short Sale offer from a potential buyer, you will need approval from your servicer to proceed with the sale. Once you receive that approval and the sale closes, you will not be required to pay any remaining balance on your mortgage loan, and you may even receive cash to help with moving expenses.

  • You can sell your home at market value
  • You no longer owe the large debt to the mortgage company
  • You receive cash to assist you with expenses in relocating
  • You avoid the costs and stress of public foreclosure
Foreclosure Alternatives
Deed in Lieu

With a deed in lieu of foreclosure, you voluntarily transfer title to the property to the lender in exchange for forgiveness of your mortgage debt and all associated costs, such as late fees, legal charges, and past-due interest payments.

  • You no longer owe the large debt to the mortgage company
  • PennyMac will give you cash to cover expenses in relocating
  • You avoid having a foreclosure on your credit report
  • You avoid the costs and stress of public foreclosure
  • The ability to work out a mutually convenient move out date
  • You can still have your home listed for sale
Foreclosure Alternatives
HAFA Matrix

All servicers that have signed agreements with the U.S. Department of the Treasury (Treasury) to participate in the Home Affordable Modification Program (HAMP) must consider eligible borrowers who do not qualify for HAMP for other foreclosure prevention options including Home Affordable Foreclosure Alternatives (HAFA) which includes short sale and deed-in-lieu. Each servicer, however, has some discretion in determining additional eligibility criteria and certain program rules.

PennyMac customers:

  • PennyMac does not charge fees for a modification or other loss mitigation plans when you are facing a delinquency.
    • PennyMac will work with you to ensure every option possible is explored to retain homeownership. No fees. No strings.
  • PennyMac does not accept payments from Money Gram.
  • Funds are always payable to PennyMac and not to an individual.
  • PennyMac does not accept gift cards as payment and will not call you and ask for a gift card number.
    • Anyone who demands payment via gift card is always a scammer. Gift cards work like cash, once you’ve provided the number you will not be able to get your money back.
    • Don’t be fooled! To learn more about Gift Card Scams, read the Federal Trade Commission’s article.

PennyMac will work with you to ensure every option possible is explored to retain home ownership. No fees. No strings.