Which retention option allows borrowers to keep their home while resolving delinquency issues?

The loan modification option is an effective strategy that permits borrowers to retain ownership of their home while addressing issues related to delinquency. This process involves recalibrating the existing mortgage terms, which often leads to reduced monthly payments or an extended loan term. The primary objective of a loan modification is to make the mortgage more manageable for the borrower, thus helping them avoid foreclosure and stay in their property.

In contrast, foreclosure is a legal process that results in the loss of the home, as the lender takes back the property due to the borrower's inability to make payments. A short sale involves selling the property for less than what is owed on the mortgage, allowing the borrower to exit the loan, but they lose the home in the process. Cash-out refinance enables homeowners to access their home equity but does not directly address delinquency issues and may place additional financial strain on the borrower.

Thus, loan modification stands out as the optimal choice for those seeking to resolve delinquency while maintaining their homeownership.