Loss mitigation path designed to keep the borrower in the home by curing, repaying, deferring, or restructuring mortgage arrears.
A retention option is a loss mitigation path designed to help a borrower keep the home while curing, repaying, deferring, or restructuring mortgage arrears.
Retention option matters because not every distress solution has the same goal. A borrower who wants to remain in the home needs an arrangement that addresses both the past-due amount and future payment performance.
Keeping the home does not necessarily mean keeping the original loan terms. A retention option may require larger temporary payments, extend the maturity date, change the interest rate, defer part of the balance, create a subordinate claim, or require a trial period before permanent terms take effect.
Affordability and eligibility still matter. The servicer evaluates verified income, expenses, hardship, arrearage, loan owner or program rules, and prior assistance. A retention option that is available in the waterfall may still be unsuitable for the borrower’s broader budget.
Borrowers encounter retention options during Loss Mitigation review. Common paths can include reinstatement, repayment plans, payment deferrals, partial claims, trial period plans, and loan modifications. Forbearance can temporarily stabilize the account but usually requires a later exit solution.
| Option | How it generally addresses the delinquency |
|---|---|
| Reinstatement | Pays the amount required to restore current status |
| Repayment Plan | Spreads catch-up amounts across scheduled payments |
| Payment Deferral | Moves eligible arrears to a later payoff, sale, refinance, or maturity event |
| Partial Claim | Uses an eligible subordinate claim to address arrears under the program |
| Loan Modification | Changes one or more loan terms and may capitalize eligible arrears |
| Trial Period Plan | Tests required payments before a permanent modification is finalized |
Availability and exact treatment vary by loan. The borrower should verify whether escrow is included, whether a deferred or subordinate balance bears interest, how maturity changes, and what documents or payments complete acceptance.
If the proposed payment is not sustainable, accepting solely to delay foreclosure can create another default. Borrowers should compare the complete written terms and response deadline.
The monthly payment is only one part of the comparison. A borrower should also identify:
| Question | What it reveals |
|---|---|
| What is due now? | Any contribution, trial payment, or catch-up amount needed to accept |
| What is the ongoing payment? | Principal, interest, escrow, and any temporary payment step |
| Where do the arrears go? | Whether they are repaid, capitalized, deferred, or placed in a subordinate claim |
| When does another balance become due? | Future payoff, sale, refinance, transfer, or maturity effects |
| What completes the option? | Trial payments, signatures, notarization, recording, or other conditions |
A retention offer can be successful only if the borrower can meet both the immediate acceptance terms and the ongoing property costs. Taxes, insurance, association charges, maintenance, and other ownership costs can remain even when the mortgage payment changes.
A borrower has returned to work after a temporary hardship and can afford the normal monthly payment but not a $14,000 arrearage. The applicable waterfall finds the borrower eligible for a payment deferral that moves the arrears to a non-monthly due balance. The borrower reviews the payoff effect and accepts because the regular payment is sustainable.
A retention option differs from a Non-Retention Option because retention is designed for continued ownership or occupancy, while non-retention resolves the mortgage through sale or transfer of the property.
It differs from Reinstatement because reinstatement is one possible way to cure the loan, while retention option is the broader category.
It also differs from a Loan Modification because modification is one possible retention option. Retention can occur without changing the note terms.
It differs from Forbearance because forbearance temporarily pauses or reduces payments. A retention workout explains how the resulting delinquency will be resolved.