Tips for Avoiding Foreclosure

In 2006, the rate of new mortgage foreclosures hit a record high according to the Mortgage Bankers Association. More than 2.1 million Americans missed a mortgage payment in the same year.

Even more frightening is that we have been bombarded with forecasts of doom and gloom in daily headlines of news, newspapers and the Internet with regard to home loans, banks and lenders.

Losing your home to foreclosure can mean years of ruined credit just for starters—making it very unlikely or an incredibly expensive attempt at purchasing another home in the future.

If you are experiencing some type of financial trouble due to the loss of employment, illness or other factor—the first thing to do is contact your lender. Lenders do not want to begin foreclosure on a property - under normal circumstances, most lenders want to work with individuals.

The longer you wait, the fewer options may still be available to try and work things out. Foreclosure is emanate after three to four missed payments with no communication with the lender.

A counseling service provided by the Home-ownership Preservation Foundation (www.995hope.org), says that the sooner a homeowner picks up the phone and calls their lender or a U.S. Department of Housing and Urban Development (certified counseling agency for assistance), the more options they have to avoid foreclosure.

• Forbearance - An agreement that lets homeowners make reduce payments, or no payments for a certain amount of time.
• Reinstatement - An agreement that lets the homeowner pay the missed payments on a specified date.
• Modification - The lender agrees to modify the loan to make it more affordable for the homeowner.
• Deed-in-Lieu - An agreement that releases the borrower from most or all the personal indebtedness associated with the defaulted mortgage loan. It also avoids the foreclosure being made public record if foreclosure is the only option.

If you are worried about foreclosure of your home, or if you have missed mortgage payments, here are some additional tips:

• Do not ignore attempts from the lender to contact you for missed payments. Communicate with your lender's loss mitigation department in writing or by telephone to see if it is possible to negotiate payments.
• Free counseling is available twenty-four hours a day with the Homeownership Preservation Foundation - HOPE hot-line at (888) 995-HOPE.
• Seek legal guidance if you do not understand the mortgage contract or agreement.
• When lenders file for foreclosure it is made public so beware of scam artists seeking to take advantage of the opportunity.