Lake County Credit Union (LCCU) approved a mortgage loan to Giselle for $175,000 at a fixed rate of 3.75 percent with a thirty-year term secured by the home.

After paying $10,500 of the mortgage, Giselle lost her job and asked LCCU to defer the payments on the mortgage for six months, when she was to start a new job.

In the current market, the value of Giselle’s home had decreased to $125,000.

What is the best option for LCCU to recover the outstanding amount of the loan? The lender’s options include a forbearance, a workout agreement, a short sale, a deed in lieu of foreclosure, and a friendly foreclosure.

Because the market value of Giselle’s home has fallen below the amount owed on the mortgage, a ______________ sale would not likely recover the debt.

Most of the other options would cost the parties time, expense, and other negative consequences. These consequences could be avoided by a ______________ or a ______________ agreement.