More and more homeowners are feeling the pinch created by the current economic climate and are having trouble making their monthly mortgage payments.  This has led to a rise in the number of homes being soild at foreclosure auctions each month.  Though there are differences in foreclosure guidelines that depend on both the state and the lender, communication is the key to stopping any foreclosure. 

If you have missed a mortgage payment, the best way to avoid foreclosure is to communicate with your lender.  Do not avoid phone calls from your lender, the situation will not resolve itself if you ignore it.  If your lender is trying to get in touch with you and is not succeeding, the lender is more likely to start foreclosure proceedings as soon as the foreclosure laws in your state allow.  If, however, they are able to talk to you, they are more likely to be patient because they know that you are working to resolve the problem.  Communication with your lender is the only way to find out what options they might have available for you and you may be able to come up with a long term solution that will keep you in your home.

While the options available to struggling homeowners varies greatly from lender to lender and state to state, there is one option that seems to be widely available. Most lenders have some kind of home loan modification as an option for homeowners that are struggling under their current mortgage. Most homeowners who have fallen behind on their payments do not qualify to refinance their homes. Refinancing is the creation of a new loan, whereas a home loan modification is changes to the current loan. Homeowners who are delinquent on their mortgage may be able to qualify for a home loan modification.

The changes that can be made to a mortgage through a home loan modification are at the discretion of the lender and can include any of the following:

• A reduction in the interest rate
• Change in the length of the loan
• Reduced principal balance
• Past due payments and penalties added into the principal balance

While each lender has different requirements, there are some standard documents that most need in order to process a home loan modification request.

• Hardship Letter
• Pay Stubs
• W-2s
• Bank Statements

A home loan modification is usually arranged directly between the homeowner and the lender. There are companies out there that can assist the homeowner, but they typically charge a fee and not all can be trusted to do what they say they will. Most lenders do not charge any kind of fee to the homeowner for modifying the loan. Many homeowners that want to negotiate with the lender on their own find that using a home loan modification kit can be of great help. While there is a purchasing cost involved with using a home loan modification kit, it is usually less than the fee that would be charged by a home loan modification company. A good home loan modification kit will have step by step directions on what to have prepared, how to start the discussion with your lender, and have samples of the documents you need.

Avoiding your lender's calls and not taking steps to remedy a delinquent loan is a sure way to end up facing a foreclosure.  Talking to your lender as soon as your are having trouble making payments is the best way to have the most options available to you.  Your lender is likely willing to work with you to help you stay in your home.  Whether a home loan modification or another option offered by your lender is the right solution for you, communication is the first step to stopping a foreclosure.