As previously stated, 1 in 5 mortgages in the United States is considered a subprime mortgage ⁵⁷. Many of these loans are in a balloon program, where the rates have been expiring and are set to expire over the next 2 years. As a result, as the economy continues to undergo financial strain combined with a liquidity crunch the average homeowner will barely be able to keep up with current payments let alone with increased mortgage amounts and increased costs of living. Many of the borrowers are unable to qualify for a new loan therefore unable to refinance to reduce their payments and save their homes. These homeowners are left with very few options. There are programs available but extremely time consuming and difficult to obtain from the lenders. For those willing to keep their homes and are simply seeking relief one option is a loan modifications. This entails a negotiation with the lender for a reduced monthly payment, reduced interest rate and in some cases a reduction of the principle.

For others who are looking simply to walk away from their homes there is an alternative to financial self destruction, deeds in lieu or short sales. The deed in lieu is the alternative to foreclosure. Essentially the borrower enters into a contractual agreement with the lender to return the property without the lender going through formal foreclosure proceedings and it posting to the credit record. Another option for the borrower is the short sale. This option requires that the borrower find a ready willing and able buyer to purchase the property at market value but less than the amount of the mortgage. It is difficult to obtain bank approval for either a deed in lieu or a short sale. As the market continues to worsen terms, guidelines and what lenders are willing to accept are inconsistent.

⁵⁷ http://news.bbc.co.uk/2/hi/business/7070935.stm