You can avoid an REO foreclosure by: Selling your house before it goes up for auction.  Real estate investors, we buy houses companies, wholesalers, and land developers can sometimes close before the foreclosure auction starts giving you cash in your pocket without losing everything. A short sale, when you sell your home for less than what you owe on it, is a solution where the bank absorbs the loss. However the bank needs to approve the short sale so you will need to hire a licensed short sale attorney to help. A Deed in Lieu of Foreclosure is a last option to avoid an REO foreclosure.  This is the process where you voluntarily sign the deed over to the bank if they agree to it, and they release you from your mortgage. This can save the lender the cost of going through the foreclosure process and help to save your credit.