Foreclosure, like deed-in-lieu, short sale, and bankruptcy are common methods that property owners are using to sell and/or change ownership with distressed properties. Each property owner, and each method is different.
There are also regulations in place (please see below) for mortgage modifications that the property owner may want to consider.The property owner needs to first, consider the outcome that will best suit their needs before they take a particular method.
The main thing is to communicate with the mortgage company to find out what they can do for you and with, at least, a Realtor that will help you make that decision if you decide to follow through. The feedback I get reassures me that once that is initiated, the rest falls in place.