That home equity loan sounded like a good idea at the time — tap into your equity and use that money to fund home improvement projects or even your kid’s college education.

Unfortunately, the time will come when it’s time to pay.

Home Equity Loans

Home equity loan foreclosure cases are part of the overall foreclosure happenings that have been on the rise since the housing market collapse a couple of years ago.

Home equity loans (HELs) are often used for home improvements or other expenses for the home. The loan can be at a fixed or variable rate and it is secured by a mortgage lien.

So what happens when you have a home equity loan which is, as previously stated, secured by your home, and you foreclose on your home.

Here are some tips or things to do to stop, prevent or avoid foreclosure.

    1. Ask lender to allow you to pay 1/2 of loan payments for 6 months & then after paying 1/2 payments for 6 months start paying 1 1/2 payment for 8 months, to get back on track, & some lenders will allow this.
    2. If you have enough equity, get a new loan and pay off the defaulted “in foreclosure” loan.
    3. Get cash from your life insurance and use that cash to pay the defaulted loan.
    4. Ask lender to allow you to skip 1 to 3 payments & most lenders will allow this, maybe even Equity 1 Loans.
    5. Sell your house and move into a cheaper place.
    6. Do a deed instead of foreclosure, meaning transfer deed of your house to lender & walk away free & clear of debt, liability, & property.
    7. If divorce or loss of second income caused your loan default, then get married again to a spouse who can help you make the payments of property taxes & fire insurance & mortgage loan payments on your home/property. Marry a rich spouse, if you can.
    8. If unexpected major home maintenance expenditures caused you to be unable to pay your mortgage loan payments, then try to be more of a “do it yourself handyman”, to save on & to prevent such expenditures.
    9. Stop paying credit card payments and pay your home mortgage loan payments instead.
    10. Ask lenders to allow you to pay interest only (nothing on principal) for the next 12 months & most lender will allow this.
    11. Give to your lender a catch up plan or forbearance plan, meaning offer to lender to pay 1.3 loan payments when each payment is due, to eventually catch up and reinstate the loan & thereby stop foreclosure. Give to use your own catch up plan, please.
    12. Use your savings account money to reinstate the loan in foreclosure.
    13. Ask the lender to let you skip 3 payments & pay them at end of loan, & many lenders will allow this. Give to use your own catch up plan, please.
    14. Cut down on restaurant lunches & save money for mortgage payments by eating more often at home.
    15. Get a job, or a 2nd job, and use your income to pay the loans and other obligations pertaining to your home/property.
    16. Stop the foreclosure by just merely fully reinstating the loan and ask lender for a full reinstatement quote.
    17. Get a job in the early morning, like 4AM to 6AM, delivering papers, to earn $300 to $800/mo. and use that income to help pay property obligations with.
    18. Get rid of your cell phone and use the savings to pay the mortgage loan payments.
    19. Ask lender to postpone the foreclosure, if & while you keep property tax & fire insurance up to date & pay 1.3 loan payments each loan payment due date, until you eventually fully reinstate the loan & thereby cancel the foreclosure status. Give to use your own catch up plan, please.
    20. Refinance, get a loan elsewhere, at a cheaper interest rate, to lower your payments & most lenders will help you get a loan from another lender, no prepay penalty, including Equity 1 Loans.
    21. Get a 2nd loan that produces cash, to be used to bring the first loan up to date, if you have enough equity and payback ability to do this.
    22. Get a reverse mortgage, if over age 62 and if you have enough equity in your home, if you cannot or will not pay the obligations pertaining to your home.
    23. Ask lender to add your missed/defaulted back payments to your loan.
    24. Do not file Chapter 13 bankruptcy unless you can afford to pay the bankruptcy trustee 10% of all the payments you pay to him & to pay your attorney maybe up to $4,000 & to pay the Chapter 13 payments, that the bankruptcy judge will force you to pay, which includes all mortgage loan payments plus extra payments to catch up defaulted payments plus other debts on top of that.
    25. Get a second or third job and use that extra income to make mortgage loan payments with.
    26. Ask in-laws for a loan to you of cash to be used to stop foreclosure.
    27. Ask brothers and sisters & cousins & parents for a loan of cash to be used to stop foreclosure.
    28. Get rid of your fancy, big, gas guzzling car and buy a cheap economy car & use the savings to pay your mortgage loan payments with.
    29. Get rid of your gardener and cut your own grass, to save $80 to $100/month, & use the savings to pay your mortgage payments with.
    30. List & sell your property with a Realtor, before the foreclosure auction occurs, if you cannot or will not pay the obligations of property taxes & fire insurance & mortgage loans on your property. If you must be a “promise breaker”, then sell your property.
    31. Do a short payoff, or short sale, meaning convince lender to take a discount or loss on lenders loan & sell property for what it is worth even if it is worth less than loan balance owing.
    32. In summer, raise your home thermostat, and in winter, lower your home thermostat, to save energy expenditures and use the savings to pay your mortgage loan payments with.
    33. Ask your boss where you work to promote you and/or increase your salary.
    34. Ask lender to let you spread out missed/defaulted payments over a year or until you catch up, example, by paying 1.3 payments each payment due date.
    35. If excessive debt obligations caused you to default on your obligations pertaining to your home, then get rid of those other debt obligations by filing a Chapter 7 Bankruptcy, which will not get rid of a real estate loan, but will usually get rid of no-secured debts. Ask an attorney.


You will most likely still be responsible for the loan that you have taken out. Obviously, your home can no longer be used as collateral for the loan, but you will then have a personal liability.

The creditor will probably proceed with collection action if you are no longer paying off your loan, and they may even file a lawsuit against you to get the money that you owe them.

Deficiency Balance

Also, if, after the foreclosure, the auction of the home does not cover the full balance of the first mortgage, then you could also be responsible for what is termed a “deficiency balance” on that first mortgage.

And this too could result in more collection activity and/or lawsuits against you in order to collect the payment owed.

If, on the other hand, the earnings from the auction do cover all of your mortgage and home equity loans, it is quite possible that you can breathe a sigh of relief and be free of any obligations.

Find Help

If you are undergoing a home equity loan foreclosure, then you need help and support. There are not many worse experiences than going through a foreclosure and losing your home, possibly one that you have lived in for quite a while.

That is the most immediate impact, but you also will suffer a long-lasting impact on your credit score, which can hurt you in all of your future endeavors.

Special Forbearance

If you are not yet in foreclosure, or if you just feel that your situation is getting out of control, then you should first contact your lender. You may qualify for a “special forbearance” which really just means a modified payment plan.

You could also try refinancing your mortgage so that you are able to afford it.

Or, you may even be able to qualify for a FHA “partial claim” which makes a one-time payment to catch you up-to-date with what you owe.

Remember too that while the thought of losing your home scares you, it also very much scares your lender. If your home goes into foreclosure, your lender will very likely lose money, and whether they do or they don’t lose money, they will go through a lot of paperwork, and spend a lot of extra time and effort on your foreclosure.

In order to prevent home equity loan foreclosure, get in touch with your lender as soon as possible.