Some people believe that refinancing is a worthwhile solution when they are trying to avoid foreclosure. This is generally a wise idea, if there is equity in your home and if you refinance before your credit is hurt from the missed payments. The problem is that many homeowners do not land into this category. Most foreclosure victims have very poor credit and no equity. This means that the majority of people facing foreclosure and wasting valuable time trying to find a foreclosure loan.

A better fix is a loan modification with your current lender. This is when the terms of your existing mortgage are altered to produce a lower monthly payment. In essence, it is just like a refinance, but your credit and equity are not a major determining factor, like a refinance. In most cases, the interest rate is lowered and the term of the loan is re-amortized to a 30 year fixed rate. In some cases, the principal loan amount is even lowered to reach the target payment.

In some cases, simply asking your financial institution for a loan modification will work. But more often than not, you will need to hire a professional negotiator to work on your behalf. When you hire a professional, make sure you do not pay cash up front, or if you do, it is placed into an escrow account until the process is complete. If you do not get results, you should not have to pay for their efforts! Do your research and be careful not to get taken advantage of. New laws are in place to protect borrowers, but criminals will always be ready to steal your money if you allow them.

When negotiating with your financial institution, you will have to complete a loss mitigation package when attempting your loan modification. This will help them ascertain your qualifications. This is where a professional will come in handy, since getting rejected can be final. It is important to submit a package that is thorough and can be approved the first time around. You may be asked to show proof of income, as you did when you obtained the original loan. Whether or not things have changed with your personal finances is one of the things that the lenders will look at.

If the value of your home has decreased and you are upside down in your loan, then you need to decide if keeping your property is even the best decision. As I said earlier, you may qualify for a loan modification with a principal reduction, but selling the home may be your best bet. When you are upside down in your mortgage, a short sale can be an easy way out. A short sale is when the property is sold for less than the payoff amount and the bank forgives the difference.

Short sales can be tricky however, because your lender will not easily agree to this solution and may pursue a deficiency judgment after the home is sold. It is very important to get your agreement in writing and to make sure they waive their right to pursue this deficiency judgment at a later date. We never recommend homeowners attempting a short sale on their own. Professional short sale negotiators or real estate agents specializing in this type of sale are available at little or no charge to the homeowner, so take advantage and make sure your rights are protected.

Regardless of what you decide, it is important to understand that you have choices and allowing the home to go to foreclosure is rarely a good idea. Your credit will be hurt for years to come and buying a new home will be very difficult until you have recuperated. Do not be afraid to ask for help or retain a professional to help you through these rough times.

Much better than any blog I could write today. This is important information for all homeowners -- not just ones in Minnesota.

Corrupt lenders, foreclosure attorneys, local judges and law enforcement taking advantage of public funds made available by the federal government in order to increase shadow profits and ensure that homeowners are not aware of their rights under the law.

With dozens of failed banks since the financial markets melted down, the Federal Deposit Insurance Corporation (FDIC) has had its hands full and its resources stretched to the breaking point as it attempts to deal with so many bad assets. For homeowners who had loans originated or held by these failed banks, though, there are additional hurdles when defending against a foreclosure action.

There are two main issues that must be clarified once a bank goes out of business and is taken over by the FDIC. The first is whether or not all of the administrative processes of the FDIC must be exhausted by the homeowners before they can have a court review their claims against the bank. The second is which claims against lender misconduct would even survive the special protections the FDIC enjoys.

In terms of the first issue, statutes govern the administrative claims procedure that homeowners must go through when a bank fails and is taken over by the government. In essence, the FDIC has the right to disallow claims made by homeowners, but the agency must send out a notice advising them of their right to present their claims within a specified amount of time (90 days from the date the notice is published). Then the agency has another 180 days to decide if it will allow the claim or not.

In many circumstance, it would be best for the borrowers to speak with an attorney about this issue, as there is a lot of case law and administrative law that has been decided with regards to the FDIC and bank takeovers. If the homeowners do not file their claims with the agency in the manner specified, they may lose their right to the claim forever. This is even if the claims were previously raised against the failed bank itself in court before being taken over.

The second issue relates to which claims would survive a bank takeover. The FDIC enjoys numerous protections against claims that could have been made against the original lender, current mortgage holder, and servicing company. Homeowners and their attorneys will have to answer a number of questions to determine if and what claims would survive.

These questions are the following. Did the bank actually fail, or was it taken over in some other way by the FDIC? For claims relating to the origination of the loan, did the failed lender own the loan at the time it failed? For claims relating to servicing duties, did the failed institution actually service the loan at the time it was taken over? Is the claim one of the types that survive receivership by the FDIC?

Some of the claims that do survive receivership include the following: fraud in the factum; alleged alteration of documents; failure of consideration; rescission rights under the Truth in Lending Act; breach of fiduciary duty; breach of contract; wrongful acceleration and unreasonable sale at foreclosure. There are a number of other claims that would also survive the FDIC taking over a bank.

Obviously, defending against foreclosure can become incredibly complicated when the federal government takes over a bank. Although possible, it is probably not realistic for homeowners to take on the legal defense of the home on their own. Even more administrative and case law comes into play with the FDIC taking over a bank, and it is potentially best to hire an attorney in these situations.

One step of the loan modification or refinancing process that homeowners always mess up is the hardship letter. Every lender that is thinking about giving the debtors an option to avoid the foreclosure process will request a detailed letter documenting what first caused the delay of monthly payments, as well as what steps have been taken to fix the problem.

Many homeowners, though, write very quick hardship letters that explain almost nothing about what occurred, what has been done to remedy the situation, and why the financial crisis was only temporary in nature. In reading dozens of such letters over the years, it seems that many borrowers do not understand what to include when writing the lender.

The most vital part of the letter is the description of what happened to cause the crisis. This should be as specific as possible, because financial institutions will want to make sure that it was an actual hardship that caused the homeowners to become delinquent in payments. Something like a layoff or huge medical expense will be given more credibility than a sick cat or broken TV that was repaired.

It is also necessary that homeowners include dates and time frames during which portions of the hardship were experienced. Banks do not want vague descriptions of losing a job and then finding one. They want to know what month the hardship happened, then what was done in the meantime while payments were being omitted, then when exactly a new job was begun.

Finally, homeowners should include a specific call to action that they want their bank to take. Whether it is modifying a mortgage or accepting a short sale, unless the bank is aware of exactly what the borrowers want, they may not know what to do with the workout documents. Being clear about their intentions with the property is the best way for owners to communicate with mortgage companies.

The hardship letter is a necessary piece of the package of paperwork that mortgage companies require before dealing with foreclosure victims. Debtors should take the opportunity to account for what happened to cause them to become delinquent in as much detail as they can. This is their time to explain that they are not bad clients and deserve another chance to hold onto their house.

With the huge unemployment and under-employment rates in the United States, more people are seeking ways to escape from the debt trap without the threat of being sued and pursued for years down the line. But when it comes to dealing with creditors and collection agencies, borrowers should take a series of steps so they are sure of having the best chance to defend their assets and avoid harassment and intimidation.

During times of positive economic growth, whether caused by inflation and cheap money or real production, borrowing money to finance expenses may seem to make some financial sense. But when a bubble caused by government stimulus and manipulation in the market then bursts, debtors realize that they will not be able to pay back their loans as agreed.

In the past, filing bankruptcy was stigmatized, viewed by one's family and community as a sign that a person had done something wrong by borrowing money and not paying it back. Borrowers would do everything they could, including entering into repayment agreements with their banks, in order to pay off their debts, even if not for the full amount at the original interest rate. But they tried to make good on their agreements taking into consideration their new financial circumstances.

However, with the government subsidization of corporate bankruptcies, this view is changing. More homeowners facing foreclosure and credit card borrowers see default and bankruptcy as business decisions. And there is little reason that people see to pay back any portion of their debts. After all, the banks have been transferred more than enough to pay off every mortgage and credit card in America.

Unfortunately, tens of trillions of dollars in transferred money as a result of blackmailing Congress has not been enough for the financial industry. They also expect borrowers to pay back one hundred cents on the dollar for every single one of their car, credit card, student, and home loans. Borrowers, on the other hand, are looking for ways to fight back.

The first step that any debtor should take is to learn as much as they can about how creditors go about taking a home back through foreclosure or charging off and then attempting to collect a credit card debt. There are a number of websites, forums, and e-books explaining these processes, as well as common defenses.

The next step is for borrowers to get an idea of how common violations of the laws governing collection of debts may apply to their situations. They may have to do some basic legal research, post questions on online forums for further information, or call and speak with someone from their state's consumer protection and attorney general offices.

This should give the debtors a fairly good idea of which laws apply to the situation, what the banks have done to break the laws, possible penalties, and whether they need to start their own lawsuit against the collectors or defend against an ongoing lawsuit.

A final step in the beginning of this whole process is consulting with an attorney who specializes in helping consumers fight back against banks and other financial institutions. Consumer protection lawyers may know the federal debt collection and credit laws, while real estate attorneys may have experience defending a foreclosure in court.

The reasons to consult with an attorney are numerous. First, attorneys will know how to file the paperwork in the most efficient manner possible. A debtor's arguments -- even if they are valid -- can be thrown out of court if the paperwork was not filed correctly. Second, the banks have their own attorneys, so borrowers should have the same advantage in the legal system. Finally, a good attorney will be able to eliminate weaknesses and highlight more strengths in the case, making it more likely the debtors will win or at least be given a fair shot at defending their assets.

Thus, for borrowers who are unemployed or underemployed and worried about their debts, there are at least three steps they should consider taking. First, learn about the laws and how banks and collectors routinely violate them. Second, apply this knowledge to the current situation. Finally, consult with an attorney to ensure the case is as efficient and solid as possible.

There was a story this week on Bloomberg News regarding homeowners in foreclosure and banks pursuing deficiency judgments are a sheriff sale. According to the article, lenders have nearly doubled the amounts that they are recovering from homeowners who have defaulted on first mortgages and home equity loans.

However, this trend is reversing directions now. Banks are beginning to pursue more deficiency judgments against former homeowners. The tens of trillions of dollars printed up by the Federal Reserve and the hundreds of billions transferred directly from the Congress to the banks were obviously not enough. Banks also expect borrowers to pay back their loans in full.

For the past decade, at least, deficiency judgments have been somewhat rare. All things considered, what is the bank's financial motive for going after borrowers who have lost jobs or run into six-figure medical expenses without having health insurance? Most banks realized that homeowners fell behind due to a lack of assets they could use to pay the mortgage.

The lack of assets owned by homeowners combined with the skyrocketing appreciation of real estate to make pursuing homeowners after a foreclosure fairly pointless. The lenders could simply buy back the homes at the public auction, list them for sale on the open market, and make a huge profit flipping the house in a matter of days or weeks.

There has also been a concerted effort by the media and financial commentators to make homeowners feel that they have a "moral obligation" to pay their debts. If the mortal obligation line does not work, then threats of being sued by lenders even after foreclosure is used to intimidate borrowers.

The article also does not put the amount collected from deficiency judgments in any sort of perspective. While it states that over $1 billion in first mortgages and close to $400 million in home equity loans were recovered, it does not compare this with the total size of the US mortgage market, which is estimated to be over $10 trillion. Collecting $1.5 billion of a $10 trillion market is still such a small number as to be nearly not worth mentioning.

Furthermore, are banks really going after more homeowners who have lost their homes due to job loss or other financial emergencies? This is not likely, as these borrowers will be without any assets. It is more likely that banks are going after wealthier individuals who bought multiple homes on credit and are simply walking away from their properties in order to preserve their assets. Investors and speculators have more to fear from a deficiency judgment than individuals defaulting on their only homes.

Finally, it is still important that homeowners keep in mind two aspects of deficiency judgments that work in their favor. First, they are usually limited to the difference between the current fair market value of the home and the sale price at auction, without taking into account the original balance of the loan or the judgment. With the huge decrease in home values, deficiency judgments will be much smaller than they would have been if default had occurred at the top of the market.

Second, deficiency judgments are entirely dischargeable as unsecured debts in a Chapter 7 bankruptcy filing. So even if homeowners do get sued after foreclosure, they may be able to get rid of the debt by filing Chapter 7. And with a huge debt of tens of thousands of dollars, it becomes easier to qualify for discharge, as the debt can easily outnumber the value of the borrowers' assets.

Thus, even if deficiency judgments have doubled or increased even more dramatically since the housing bubble collapse, they were only awarded by courts in a tiny percentage of cases. Recoveries still take up fractions of a percent of the entire mortgage market, and debtors who lost their homes due to lack of financial resources still have little to fear from a deficiency judgment.

Several articles on this site have examined the corporate and legal status of the company known as MERS. MERS stands for the Mortgage Electronic Registration System, and is a private company that allows its members to transfer ownership of securitized mortgages from one company to another without recording those transfers.

Although this secretive company is not often in the news, it has been receiving more scrutiny with the collapse of the housing market and the huge increase in securitized mortgages. MERS is listed on the title and other paperwork of many home loans, and with more of them in foreclosure than ever, the legal status of the company is being challenged more often.

There are a number of problems with some of the rights that MERS claims it has, as well as the benefits it supposedly allows its members to enjoy. The company administers a nationwide database of mortgage loans that tracks the transfer of ownership of these loans. MERS is listed as the nominee in public records, while the actual owner of the mortgage is kept secret.

In fact, the actual owner of the loan is kept so secret that only members of the Mortgage Electronic Registration System have access to this information. Everyone else, from county recorders to the press to the homeowners facing foreclosure, are not allowed to know which company currently has ownership of a loan. This causes some huge problems with MERS and the law.

For instance, because MERS conceals the owner of a loan, and the owner of the mortgage may hire a mortgage servicing company to administer the payments, borrowers may find it very difficult to determine which company to request a loan modification from. The real holder of the note is kept completely secret from the homeowners.

Also, if the homeowners wish to send a rescission notice under their Truth in Lending Act rights, they must send it to the owner of the loan. If they are unable to find this out due to the MERS system of transferring ownership of mortgages without recording such transfers and keeping information concealed from borrowers, the homeowners' rights are infringed upon.

While mortgage servicers are required to inform borrowers which company owns their loan, this requires a request from the homeowners. Answering the request can also cause weeks or months of delay that cost the homeowners even more money if they are behind on their payments and attempting to negotiate a mortgage modification, short sale, or other alternative to foreclosure.

There have been a number of recent court cases that have also effectively challenged the legal rights that MERS claims it has. While an examination of those cases is beyond the scope of this current article, the decisions of courts in Kansas and Arkansas have significantly wounded MERS in both judicial foreclosure and nonjudicial foreclosure states.

For years, MERS has been a constant source of frustration and confusion among both foreclosure victims and their advocates. The company appears on a large number of mortgages throughout the country, and its secrecy has combined with the huge increase in the foreclosure rate to ensure that there is even more disarray in the housing market than there should be. The fact that the company has recently been wounded in its attempts to stay secret and all-powerful is a positive sign for borrowers.

When facing a financial crisis, homeowners often worry about their mortgage company and the credit card companies far more than they worry about their own lives and families. They mistakenly believe that they have a moral obligation to keep paying the mortgage and the credit cards, while living in a home without food, water, electricity, or heat.

One debtor, however, has turned the tables on the creditors and debt collection agencies by finding all of the myriad ways that they violate state and federal laws when attempting to collect debts from borrowers. His story is detailed in the Dallas Observer and makes for extremely interesting reading, and should serve as a lesson for other homeowners.

The story details the case of Craig Cunningham, an unemployed man who owes about $100,000 in debt. Instead of taking the collection agencies' calls, pleading with them not to sue him, or making payment arrangements he will never be able to keep up on, he has turned to a different tactic. He waits for the collectors to violate laws; then he sues them for it.

In many of our other articles, we have detailed how collection agencies, mortgage companies, and banks violate federal laws like the Fair Credit Reporting Act, Fair Debt Collection Practices Act, and state Unfair and Deceptive Acts and Practices laws. Cunningham has taken ideas such as these and used them to keep collectors honest and make the predatory, manipulative ones pay for their illegality.

Numerous laws protect homeowners and credit card borrowers against predatory and aggressive collection attempts. The problem has always been that too few debtors are aware of these laws and how they can be used to reduce a debt or force collectors to pay thousands of dollars in fees to the borrowers.

Obviously, it can be very lucrative and empowering for ordinary homeowners to use these laws against the banks who have preyed on them, made terrible business decisions themselves, taken hundreds of billions of dollars in public money to cover up their fraud and greed, and are expecting debtors to pay back one hundred cents on the dollar of all of these loans.

Some borrowers are realizing that it is just unreasonable to negotiate with creditors that have already been paid off through public funds and are violating state and federal laws in order to aggressively collect even more money from the unemployed.

Obviously, the financial industry has not taken this lightly. After all, they are the banks. Who are ordinary people to sue them for violations of the law? In response, several new companies have been created that list debtors that repeatedly file lawsuits under federal credit and consumer protection laws. According to the banks, these laws are meant to be broken by creditors, not used to keep them accountable by borrowers.

Debt collectors have also taken to labeling and degrading such consumer as "credit terrorists," because, according to the creditors, making banks and collection agencies follow the law and punishing them financially if they do not is a form of terrorism. If close to 100% of one's income does not go to the bank, and if someone takes advantage of the law to get payments due to violations of these same laws, thereby inconveniencing the creditors, it must be bad and evil.

Because of the constant bailing out of the banks, is it any surprise at all that people are defaulting on their debts on purpose? Whether it is called strategic default or credit terrorism, there is an obvious public backlash against the financial industry as people see the creditors given trillions of dollars of the people's money to pay back bad loans, yet creditors believe they should be entitled to having the loans paid back by the people anyway.

Too many borrowers are doubling the banks' money by paying off their loans. Maybe it is time for even more people to stop cowering in fear of the lenders and the courts and start taking the fight to the banks.

Many Americans have fallen behind on their mortgage payments in the last year and are looking for ways to avoid foreclosure. If this sounds familiar, you have more options to choose from than you might have had even two years ago. There are many programs available to assist homeowners in retaining their homes. Using your tax refund to avoid foreclosure may be your best option in the short term. This will help you buy the time you need to help the recovery process. A Forbearance Agreement temporarily lets borrowers pay less than the full amount of the mortgage payment during an agreed upon period of time.

Lends may consider this an option if you can show that funds are coming in from an alternative source. Using your tax refund to avoid foreclosure will often encourage your mortgage holder to work with you. Depending on your individual situation, the forbearance agreement may allow you to go without making any payments for up to a year. If you are not getting a large refund, but can prove the financial issues that caused the non-payments in the first place are behind you, these agreements may also be successful. An example of this is if you missed payments while unemployed.

If you have recently found a new job, your lender may agree to reduce or suspend payments while you get back on your feet. Using your tax refund to avoid foreclosure will help pay them back faster and help you get to work on rebuilding your credit. The important part is to begin working with your lender or a third party organization as soon as you can. If you have missed only one or two payments your options will be different than if you have missed several. A loan modification has also been an option for millions of Americans at risk of foreclosure.

In this process, one or more of the original loan terms are changed. You may have reduced monthly payments due to a change in interest rates or an increased length of the loan. If you are using your tax refund to avoid foreclosure, your lender may agree to lower the payments without increasing the length of the loan. This will greatly depend on your situation. This is also helpful if your lender is willing to set up a repayment plan. With this type of alternative, the lender adds a specific amount to the original monthly requirements, or in the case of a tax refund, one lump sum.

Today’s housing market is in a state of chaos that has not been seen since the great depression. People are losing their homes at an alarming rate to foreclosures, bankruptcy and short sales. Before the extent of the damage was realized, many people thought they could just wait it out. However, this slump has lasted far longer than anticipated. Many homeowners have taken the initiative to call their mortgage holder or have gone online to research their options in an attempt to keep their homes. As a result, technology has helped people recover from foreclosure, as well as aiding millions of homeowners in finding other options.

Not so long ago, a home equity loan was enough to help homeowners lower their monthly mortgage payments and tide them over until their financial situation improved. Unfortunately, many have found that property values have plummeted and they no longer have any equity in their homes. The real estate crisis has given birth to many new programs from both public and private institutions. Technology has helped people recover from foreclosure by making the information readily available. Programs that were once available in a limited area are now options for homeowners nationwide.

Debt relief programs that were at one time considered only applicable for a few have become popular methods for homeowners to reduce their debts. This allows them to make their mortgage payments and save their homes. Organizations that have debt settlement plans and credit card consolidation options are helping people with their debt ratio and reducing the hit on credit reports. Even if the bank has filed the paperwork and proceedings have already started, there are programs available that can help. Technology has helped people recover from foreclosure by making more options readily available to them. However, it has also spawned foreclosure and short sell scams.

Although technology has helped people cover from foreclosure, it has also made thousands of homeowners more vulnerable to this type of scam. The web sites look professional and legitimate, but are designed to help themselves, not the homeowner. Use the Internet to learn about the different type of options available to you, as well as what to avoid. Check the organization’s rating with the Better Business Bureau, research customer feedback on independent sites and compare programs. There are many companies that will help you decide which options are the best for your unique situation. Helping you fight foreclosure and protect your most important investment.

If you have had the same job for many years and have recently found yourself “between jobs,” your resume probably needs to be updated. You may be surprised at how much the focus has changed. It used an accepted practice that your previous employers were listed along with your title and job function. There was one format that was good for everything. In today’s tough job market, resume writing and interview techniques are based as much on the type of job you are interviewing for as they are on experience. It is important to remember the primary function of a resume.

Its goal is to get you an interview. It is a personalized advertisement designed to be interesting and informative. Even if you are faced with significant competition for a job, a well-written resume will get you invited for an interview. Pointing out the features and benefits of hiring you will present you in the best light. This is instrumental in convincing the employer that you have what it takes to be successful in the position being offered. Resume writing and interview techniques should not only be focused around the positions you have held, but how well you performed the duties and what you accomplished.

Have a clearly stated objective. It shows potential employers that you have a sense of direction and goals that you want to achieve. The most common resume formats are chronological and functional. If you plan to stay in your current field, especially if you have been upwardly mobile, the chronological format should be used. If you are changing fields and have skills that are focused on your new industry, a functional resume will show off these skills to their best advantage. For many people, resume writing and interview techniques are more difficult if there are gaps in work experience.

Whether you were between jobs for an extended period of time or if you were a stay at home parent, put it on the resume. It is better than leaving a gap. If you do not have just one focus, you cannot have just one resume. Create a resume for each set of goals rather than have a generic format that does not showcase any. Resume writing and interview techniques have changed somewhat in the past few years. Go online or buy a book to find out the steps that are recommended for your industry or experience level. You could find your dream job as a result.

For most people, defaulting on their mortgage payments is one of their worst fears. This opens the possibility of losing their homes and destroying the credit score they have been working their entire adult lives to improve. The real estate industry is experiencing its most significant decline since the Great Depression and many homeowners are finding that they need to make some difficult decisions. If you are among the thousands of people that have been unable to make your payments, you may need to determine if your home is worth saving from foreclosure. There are several things to take into consideration.

The first of which is the actual value of your home. You may be like many homeowners who are finding that they did not receive an accurate valuation when they last refinanced their homes, which is leading you to determine if your home is worth saving from foreclosure. Inflated appraisals are partly to blame for the current real estate crisis. The appraiser gave the loan officer whatever value was needed to attain a loan. As a result, the loan officer used these prices to value other similar homes in a specific area. This led to the overvaluing of entire communities.

It is only when the homeowners try to refinance that the discrepancy is found. With the decrease in real estate values compounding the issue, you may be faced with the need to determine if your home is worth saving from foreclosure, or if you should just walk away. Unfortunately, there is no accountability on the part of the appraiser or the lending institution. This leaves you, as the homeowner, holding the proverbial bag. The housing market has slowed to a snail's pace. Instead of homes catching up to their appraisal value, they have actually fallen significantly and there seems to be no end in sight, with 2009 being a record year for foreclosures. The more foreclosures in a neighborhood, the further home values decline overall.

This means that the two most common options used to determine if your home is worth saving from foreclosure are no longer available in many cases, selling the home or refinancing with a specialized foreclosure lender. You may not have any equity in the home at all, let alone enough to make up the difference between the mortgage amount and the market valued price. If the home at risk of being foreclosed on is an investment property, you may not have many options. Cutting your losses may be your best bet. However, if the home is your primary residence, the bank may be willing to work with you to help keep your home out of foreclosure and your credit mostly intact.

The decision that many homeowners with a property not worth saving will have to make is between giving up or giving back. Simply giving up on the home and mailing the keys back to the lender, also known as jingle mail, is one option, although not always the best one. Other methods that borrowers can use to give back their home include offering the bank a deed in lieu of foreclosure or negotiating for a cash for keys deal. Either of these options would allow the home to be transferred back to the lender, but with some rewards also being given to the former owners.

Borrowing money to purchase items with credit cards is out. With so many borrowers now in default of their loans and banks closing or reducing credit limits with no warnings, more consumers are turning to alternative arrangements to purchase goods. Credit is out. Layaway programs are becoming more popular.

A layaway program allows consumers and companies to come to an agreement to set aside a certain product while the consumers make regular installment payments. Once the agreed-upon payments have been made in full, the buyers get to take possession of the item, and the seller can not dispose of the good while it is covered under the layaway agreement.

However, there are a number of issues that consumers should be aware of before entering into such an agreement with a company to purchase an item on layaway. For instance, what happens to the payments if the buyers change their mind or default on the installment payments? Or what if the company goes out of business like Circuit City did?

In most cases of the buyer defaulting on the payments, the seller has no right to keep all of the payments made up to that point. If the sale is never completed, the payments may not be retained by the seller unless there have been damages as a result of the agreement being breached. But for most consumer products, this situation must be somewhat uncommon.

The only instance where the seller may sustain such damages are if the buyer never completes the sale and the seller could have sold the item to another customer instead of setting it aside for the layaway plan. In addition, the item can no longer be sold to anyone nor can it be returned to the supplier. This would be a rare occurrence, indeed.

If the seller does decide to retain all of the payments made by the buyers, then a violation of Unfair and Deceptive Acts and Practices statutes has most likely been committed. There are also probably violations under common law regarding contracts. In any event, the buyers are most likely entitled to their payments back.

In the event of a company setting aside an item on layaway, accepting payments, and then filing for bankruptcy protection, the situation can become more complicated. Consumers may be able to assert that the payments made were deposits that were not property of the company and therefore not property of the bankruptcy estate. Instead, they may be considered as belonging to the buyers.

In addition, even if the courts decide that the payments are part of the bankruptcy estate, consumers may be able to recoup all or much of what they have paid the company. The first $2,225 of these payments are given priority as "consumer deposits" and will be paid in full in cases of reorganization. In the case of a liquidation, such layaway payments will be given priority over the unsecured creditors.

As credit remains tight in the consumer lending sector of the economy, more buyers and sellers will come to terms on layaway agreements. While these can facilitate transactions and cut out the creditors, there are also issues that buyers should keep in mind. Especially in the case of an uncompleted agreement or a company filing bankruptcy, a layaway may not be as simple as it sounds.

One in seven mortgages is currently in danger of foreclosure. These are astronomical numbers, especially when you stop to consider that this is all mortgages, not just sub-prime loans. People who have never worried about their financial stability are suddenly in danger of losing their homes. Home values have fallen to such a level that stopping foreclosure is become more difficult. Many homeowners are turning to debt settlement and home loan modification, among other options that can help them save their properties, to prevent foreclosure from becoming an expensive reality.

Banks have several options when a mortgage holder stops making payments. Many have contracted with loan servicing companies that collect the monthly payments and are authorized to charge late fees and proceed with foreclosure if the loan goes into default. However, these companies are usually not authorized to accept a mortgage modification or repayment plan without the approval of the bank or investors that actually own the mortgage. Either the lender or the mortgage servicing company may hire a third-party company to collect the missed payments, or enter into basic repayment arrangements, but any long term changes to the collection of the loan will have to be approved by the investors who own the loan.

Lenders can wait for you to declare bankruptcy and lose all chance of recouping the loan. It is simply written off as uncollectable. However, in many cases, they attempt to repossess the property. This last option is what is known as foreclosure. Due to the sudden increase in defaults on mortgages, foreclosures have been responsible for flooding the market with homes for sale by the banks. They are often sold at a loss, if at all. The challenging economic climate has made it as difficult for people to buy homes as it is for homeowners to be successful in stopping foreclosure.

What most people need to hold onto their homes is some sort of debt relief. With debt settlement plans, homeowners are often able to reduce their required payments by 50% or more. Many creditors are concerned about collecting the debt owed to them and with the increase in bankruptcies being filed across the country, settling is often their best option. This process is also instrumental in stopping foreclosures, as homeowners will have more money to pay their lender. Banks are more willing to make arrangements with their mortgage holders for the same reasons creditors of unsecured debt are willing to settle.

If the debtor has to declare bankruptcy, they may get nothing. A loan modification is the process by which the original mortgage terms are modified by the lender, at the request of the homeowner. The goal is to lower the monthly payments. There are several ways this can be done. Sometimes the term of the loan is extended. In other circumstances, the interest rate is reduced. It is also common for both of these options to be incorporated into one loan modification package. This is has proven to be an effective method of stopping foreclosure, allowing the homeowner to retain their home.

For millions of Americans, 2008 and 2009 were miserable years, and 2010 has not started well at all. The companies they work for had gone through several rounds of layoffs, a significant drop in business, and some have filed for bankruptcy or been taken over by the government or other corporate entities. Not only have merit raises not been given, many people have been offered a pay cut in lieu of being laid off. The sentiment is that, “at least I have a job.” Unfortunately, these jobs often do not pay the bills, or allow for any type of career advancement. It leaves millions wondering how they can find a better paying job in today’s poor employment market. The good news is that it looks like the labor market may be showing signs of life in the future.

The stock market is stabilizing so far, and businesses are seeing an increase in transactions. Salary freezes may come to an end and many of the positions that have been cut over the last few years will need to be filled. As demand for product and consumer confidence improves, new jobs will be created. However, to find a better paying job in today’s poor job market, you will not find the same opportunities in the same areas they were in before the recession. In some cases, an organization may convert part-time positions into full-time or they may opt to pay overtime rather than hire additional staff.

Regardless, job growth will be slow for some years, and pay raises will be few and far between (unless you work in the banking sector). Businesses will test the market and hire a few employees at a time, rather than have a major hiring phase. Experts predict that the health care industry will continue to grow as a result of the aging baby boomers and potential new legislation coming out of the Congress. There are several types of technology jobs and engineering jobs that may be in demand as well. However, if you wait for the market to bounce back before you begin your new job search, you may miss the opportunity to find a better paying job in today’s poor job market.

Not only do you need to be patient, you also need to be proactive in finding your new job. Put your time and effort into the areas that appeal to you. Apply to companies that you are interested in working for, regardless of whether or not they currently have openings. In the worst case, they will keep your resume on file and be able to go through them at the next job opening. Staying in touch will people you know in other industries and organizations can help you find a better paying job in today’s poor job market by networking. The more you can talk about yourself in a meaningful and powerful way, the more memorable you will be. Your perfect job could be just one interview away.

For the first time in their lives, many Americans are finding that they are unable to meet their financial obligations. Bills are beginning to pile up and there seems to be no end in sight to the current economic issues. Many are turning to home loan modifications, credit card consolidation and debt settlement programs to help them keep their homes and reduce their monthly expenses. Although these programs may cause a drop in credit score, there are several financial recovery tips that can help create security and rebuild personal financial stability. This turns the difficulties into a setback rather than financial ruin.

One of the first financial recovery tips most for many financial planners is for their clients to take a long hard look at expenses. Begin tracking everything your money is spent on, from snacks at the vending machine to the large coffee at your favorite cafe. After a few weeks or even a month, take a look at your list and begin reducing or removing unnecessary purchases. This could mean making coffee at home, taking lunch to work, or cutting back on the amount of snack food purchased. For some people, this adds up to hundreds of dollars of savings per month.

Among the most basic financial recovery tips is to create an emergency savings fund. This will help provide a cushion of security. Automatically putting a certain amount of savings away each month, whether it is five percent of each paycheck, or a flat dollar amount will help. Begin to set some short-term and long-term financial goals. Most people find it is easier to start small. Try paying an additional amount on one of the high interest credit card payments you have. This will help pay it down faster, yet will not cause a financial drain. Check your credit score to make sure it is accurate.

Dispute charges and correct errors. This may help improve your score. Depending on the issue, you may need to work with a credit agency for additional help. Using automatic payments is another of the financial recovery tips that many people do not consider. Making payments on-time helps increase your credit score, but it also prevents extra fees. For some people, these fees are the difference between being able to pay all of the monthly bills and falling behind. Once that happens, it is more difficult to regain the momentum they had for rebuilding their credit and becoming financially secure.

The real estate industry has undergone a transformation the past year. It has gone from a seller's market to a buyer’s market and the short sale is becoming more common. Homeowners who took advantage of the low payments offered by an adjustable rate mortgage five years ago are coming to realize they cannot afford the new, higher interest mortgage payments. Traditionally, the next step for homeowners would be to refinance their homes to a lower rate or take out additional equity in order to pay down other bills. For many though, the home’s value has dropped so significantly that the equity they thought they had is gone. Realizing that other steps must be taken, they turn to a real estate agent for options in selling.

Now they find that the home will not sell for enough to pay the balance of the mortgage, let alone the fees and commissions that accompany a sale. A short sale may be the homeowner’s best option for selling their home and avoiding foreclosure or bankruptcy. This is that process by which a home is sold for less than the total amount still owed to the bank, including accrued interest, any late fees, and the principal balance. Banks are becoming overwhelmed with the amount of inventory from foreclosures, with few people to buy them. Allowing a short sale to go through helps them collect much of the money they would not have otherwise been able to.

To qualify for a short sale, the homeowner must prove they have suffered a financial hardship and have fallen behind in their mortgage payments by several months. Once the inability to make the required mortgage payment has been demonstrated, they must be willing to cooperate with the process. If the bank forgives the remaining balance, a 1099 IRS tax form is often sent. The difference between the sale price and the amount owed is considered taxable income by the IRS in certain circumstances. Although this can potentially cause a hefty IRS bill, for many it is preferable to the alternatives. As well, there are certain exemptions that can decrease or eliminate the tax altogether. When a homeowner goes through foreclosure, it stays on the credit report for seven to ten years. It also lowers a credit score by up to 100 points, so selling at a short sale and paying some small amount of income tax may be worth it.

The short sale stays on the credit report for a much shorter period of time and affects the credit report by an average of 45 points. Thus, selling at a short sale is often the best solution for homeowners who can no longer afford their monthly payments, especially if the circumstances do not look as though they will change in the near future. Due to the increase in the foreclosure market and the number of empty homes owned by mortgage companies waiting for resale, many financial institutions are willing to be more flexible in helping homeowners find a solution. Using this method, re-establishing credit and securing a new loan is much faster than through foreclosure.

If you spend any time at all listening to the financial pundits, you will hear them discussing whether we are at the end of the foreclosure crisis. Many state that the worst is behind us and that it is time to get back to business as usual and begin rebuilding the financial security of the nation's homeowners. Others point to the continued drop in home values and the number of Americans that are upside down in their mortgages. Another perspective is that, as long as foreclosure rates begin to drop, or at least not increase, we are on the road to recovery.

For the average American, whether they believe we are at the end of the foreclosure crisis or not depends greatly on their personal situation. If they are among the thousands of people who have been evicted from their homes and lost their jobs, the answer you will hear is a resounding "No." However, in the last year, there has been an increase in programs available to homeowners that have proven to be effective in saving homes. Whereas bankruptcy used to be the most popular option to protect one's home from foreclosure, there are now different methods that can be used to prevent that as well.

It is not only the homeowner that wants to take action to help ensure we are at the end of the foreclosure crisis. Banks are more motivated than they have ever been before and some of them have even been taking advantage of the new government programs to assist borrowers in obtaining loan modifications. In foreclosures, these banks run the risk of not being able to recoup the amount of the original loan amount due to the drastic devaluation of residential real estate. If the homeowner needs to file bankruptcy, they may not receive any of the funds at all and the balance will be written off. This makes it more difficult for them to write loans for potential new home buyers.

New government legislation has made it easier for homeowners to get the assistance and time they need to stop the foreclosure of their homes. Home loan modification programs have been effective in saving some homes and reducing the amount that a credit score is affected. Organizations that offer credit help and financial planning services assist the homeowner in adjusting to the new economic climate. Other programs and companies are specializing in teaching borrowers what they need to do to give up on and walk away from their properties in the most efficient manner possible and get on with their financial lives in a more affordable situation.

The question of whether we are at the end of the foreclosure crises seems to depend on perspective. Some experts believe the housing market is showing signs of stabilization and recovery, while others see nothing more than artificial measures that are propping up unsustainable prices and creating inflation in real estate that is not allowing prices to fall to a more reasonable level. If you are having difficulty making your monthly payments and need assistance, be proactive and learn about the options that can help save your home.

Millions of people who never thought they would need to worry about making their mortgage payments are finding themselves faced with the decision to file for bankruptcy or lose their homes. Family budgets are being scrutinized and everything that is not deemed “necessary” is being removed. The current challenging economic climate is not only affecting homeowners, it is affecting the businesses that are losing revenue when belts are being tightened and disposable income for the average American is at an all time low. Even local governments are complaining of depression amongst bureaucrats, falling tax revenues, and higher social welfare program costs. However, removing “extras” alone will not be enough for most people. Here are 10 ideas to raise money when facing foreclosure.

Consider applying for a stop foreclosure loan. Despite what you may have heard, there are still funds available. Most people are not turned down based on credit, income or equity until the circumstances are thoroughly reviewed. Foreclosure equity loans are available through traditional as well as online lenders. Loans are approved on a case by case basis. Loan modifications are more common than they were a few years ago, but more difficult to get due to the sheer volume of applications most lenders are receiving. However, this may be your best option if you are looking for ideas to raise money when facing foreclosure.

With this option, it is often possible to refinance the current mortgage amount or extend the term of the loan. A Special Mortgage Forbearance Agreement allows you to postpone the monthly mortgage payment for up 12 months. Many lenders make it difficult for you to do this on your own, so you may need the help of an organization that specializes in helping homeowners with ideas to raise money when trying to prevent foreclosure. If you have at least 30% equity in your home, a hard money loan may be appropriate. Qualifications are not based on your credit history or income.

Private loans are similar to hard money loans, but are financed by a private investor, not a financial institution. They often require less than 10% equity and no credit check. The investors will want to see that your income can support the new loan and that there is a decent amount of equity in the property to be used as collateral. In investor leasebacks, an investor purchases your home and sells it back to you with a new payment. The interest rate is usually around 8% and is amortized over 30 years. This gives you the time needed to rebuild your credit enough that you can refinance the loan in your own name.

Cash for Keys, Bankruptcy and Sale are all ideas to raise money when facing foreclosure that may require you to walk away from your house, but are less detrimental to your credit. With a cash for keys, you can often negotiate for several thousand dollars to move out of your house. Bankruptcy may completely eliminate some bills, through a discharge, while reducing others through a payment plan. And selling the home, either outright or through a short sale, can allow you to eliminate your mortgage payment and move on with your life into a more affordable situation.

The United States government is aware of the increased number of foreclosures in these troubling economic times. Bailout plans have been put in place and it has been said that between 8 and 9 million homeowners have the possibility of qualifying for help to avoid the foreclosure of their home. However, what it comes down to is the question of whether these government bailout plans are working or not. This query will be explored here.

There have been numerous complaints in regards to lack of specific enough information for homeowners to be able to make use of the government bailout plans. They seek help from their lenders, but they have no specifics to give. Others claim a complete lack of help available at all. Settling on the reasons for the perceived failure of the government bailout plans is hard to accomplish as people are not eager to have their mistakes publicized or even admit they have asked for help and subsequently been declined assistance.

There are no numbers to accompany the amount of people who have applied for assistance versus who have been denied or whether any loans were renegotiated. This lack of accounting and accountability has been one of the chief complaints of homeowner advocates. Obviously, the concern here is that the legislation behind these government bailout plans needs to be improved if the number of people who can find assistance with said programs are to be successful.

One of the main sections of government mortgage bailout plans is for the assistance of people who are stuck living in a home that will sell for less than the principal balance of the mortgage they still owe on it. This is equivalent to owning a totaled car, except there is no way out of being under water in your home ownership without losing a huge amount of capital. Borrowers in this situation have been turning more and more often to strategic default, simply walking away from their properties even if they can afford the payments.

The help that government bailout plans offer is limited to those whose mortgages do not exceed 5% of the appraised value. This eliminates help to a large amount of people who need it the most. Investors and those not living in their properties are also disadvantaged by the plans, as they do not qualify for assistance under most of them. But without addressing the rampant speculation and people who bought multiple homes during the boom, the only option for these borrowers is default.

The other important section of government bailout plans is loan modification. These are possible for people who have become delinquent in their payments for a month or two, but are not yet faced with foreclosure actions. The possible modifications are based on the lender’s discretion and can include anything from temporary suspension of payments, reduced interest rates or other creative changes. The success of this section of government bailout plans is dependent upon the individual lenders and mortgage situations.

During a time when national foreclosure rates are through the roof, you may be looking for ways to stop foreclosure so you can keep that roof over your head. Usually, the process of foreclosure does not begin until you have incurred three months of nonpayment on your mortgage. If you see this becoming a possibility in your current financial state, now is the time to act.

Remaining in denial about your inability to make payments, assuring yourself next month will get better, is not the way to prevent foreclosure before it occurs. Too many homeowners engage in this type of wishful thinking, only to be rewarded with a hardship longer than expected and further threats from creditors. Predicting your future monthly expenses and discerning whether you will likely be able to make payments is the first step.

Immediately after you establish that you will likely have trouble making your next two months' premium payments on your mortgage, set up a meeting with your lender. Lack of communication never helped anyone solve their financial problems. Set your pride aside and arrange a meeting with the intent of discussing possible changes that may be made to the terms of your loan, also known as a mortgage modification.

Banks and lenders are usually not out to get you and do not want to you to lose your home. What they would prefer is to enact a loan modification to make your payments possible, or assist you in saving your home through some other option such as a short sale. Your lender should be willing to work with you to stop foreclosure before more time elapses, and the sooner you speak with them, the more time they will give you.

When it comes to meeting with your lender, you need to be able to negotiate to reach terms both parties can be satisfied with. It is important to keep in mind that the lender also wants to protect its financial position and take as little loss on the mortgage as possible. This process can be simplified on your end if you can hire someone to represent you and provide aid in your case.

Financial experts and lawyers are great people to turn to for representation and advice. These informed and practiced individuals know what lenders are looking for, so they can help you compile the correct documentation to help you get an approval on a loan modification or other agreement to help avoid foreclosure. Even if you know what you want and can negotiate for it, it may still make sense to hire a professional to help you get through the lines and phone calls necessary to work with the bank.

You can of course choose to go through the process on your own, but having an expert who has saved thousands of homes belonging to other financially unstable people is a great boost for your confidence. The last thing you want when facing foreclosure is another thing to stress out about. Work with someone who will contact your lender immediately, not badger you over the phone or sit on their hands until it is too late.

During this time of economic hardship, many new laws are being enforced to help people get out of debt and prevent foreclosure. Such laws are coming into play in the national landscape as well being localized on state levels. What the new federal foreclosure law states is that residents of homes that have been foreclosed have 90 days to vacate the premises without the necessity to make mortgage payments during that time. These rules became a federal law in May 2009 when President Obama signed the law named “Protecting Tenants at Foreclosure Act of 2009” into effect. This new law is most important for lenders and homeowners facing foreclosure to understand.

This law affects any mortgage loan that is federally related or is a loan on a residential property. Once a purchase has been made on a foreclosed home, the original tenant has 90 days to vacate. Every state is affected by this new law, so residents from California to New York now have an extended time to adjust their lives and make different living arrangements before being forced from their homes. This helps prevent families from being thrown into the streets without a roof over their heads, which is the reason behind the introduction of the law.

Different exceptions to the rule exist when contracts of a lease come into play. If there is a lease on the home, a bona fide tenant can remain in possession of the property for the remainder of the term. However, if the lease states that it is “terminable at will” according to state law, the tenant must still vacate within the 90 days. This is also the case if the purchaser of the property from an auction will use the premises as their primary place of residence. It is important to understand that these new foreclosure laws and provisions only have an effect on tenant-occupied residences, not mortgagor-occupied properties.

The differences in laws on a state level have been decreased significantly, now that this new statute has come into existence and preempted older state and local statutes. The new foreclosure laws have a timeframe in which they will be effective. Since the country is facing an economic hardship that is expected to dissipate, the law will go out of effect at the end of 2012, allowing 2013 to begin as a fresh year returning to the old law. If the economy is not where it is projected to be at that point, the law may be revised and extended.

When there are tenants renting a home from a landlord who has lost the house to foreclosure, the situation always becomes more complicated, and it is likely that the renters will fall through the cracks somewhere. This is far too often the case, as the family or individuals leasing the house or apartment may not even be aware of the foreclosure until a sheriff has posted an eviction notice on the property. Due to this new federal law, however, this type of situation may become slightly easier for the renters, if they are given notice of the foreclosure and have opportunities to plan for their future.

One of the biggest unavoidable concerns for homeowners today is the seemingly ever-increasing number of foreclosures throughout the nation. 2008 was a devastating year. Foreclosure activity was up 90% nationwide from 2007. Some localized areas were far worse, like California which saw an increase of 150% between January and February of 2008. These statistics are a little outdated, however, since as of September 2009, nationwide foreclosure statistics have seen a slight improvement. The best news is localized, however, as many of the current statistics are mixed on a nationwide level.

The main areas that real estate investors and homeowners look at when considering nationwide foreclosure statistics are the number of foreclosure filings in a certain area and the price of homes in those same areas. The current numbers suggest that there may finally be light at the end of the tunnel in terms of the housing market. Five of the top markets have seen a decreased number of filings. Michigan’s numbers have decreased by just over 4%, California is down by almost 5%, the number of filings in Texas has declined by more than 7%, Florida is down by 8.5% and Arizona has 9% less filings now than in 2008. Colorado has the most impressive improvement, seeing foreclosure filings drop an impressive 13%. Unfortunately, these promising statistics are not true nationwide. West Virginia, for example, actually had an increase in foreclosures in excess of 17%.

Cities within the states that saw improved numbers of foreclosures are showing great improvement with a limited number of exceptions to that fact. Phoenix showed that the number of foreclosures decreased by more than 8%. Foreclosure rates in Memphis dropped by almost 12% and Miami showed the most improvement with a 14% decline in filings. Several other cities also saw decreases in their numbers, but these are the most impressive foreclosure statistics nationwide.

The prices in the housing market are also important in determining the health of the country’s real estate. Four out of the top five markets in the country have seen an increase in prices. This is great news for homeowners who are looking to sell, although similarly bad news for those wishing to purchase homes at the lowest prices possible. In both states of California and Florida, the percentage of price increases is under 1%, but that amount can make a difference. Michigan, another important real estate market, saw home prices go up by 1.4%. Texas was the most impressive with an increase of 4.8% seen in housing prices.

To wrap it up, nationwide foreclosure statistics are improving overall, but not everywhere. This increases in prices and decreases in foreclosure filings may have a lot to do with federal government involvement in the housing market. Hundreds of billions of direct aid and subsidies to homeowners and buyers have directed huge resources from the rest of the economy back to the housing market. Numerous foreclosure help programs have also been created to keep property values artificially high and foreclosure rates low. The big question is how much longer the government will be able to prop up home prices, and if there will be an even larger crash if the programs and subsidies stop.

When you are facing foreclosure, a great aid to your unstable financial situation is the possibility of obtaining a mortgage modification. This is when the original terms of the mortgage on your home are altered so you can make more affordable payments on time. Obviously, for this to become a reality, both you and the lender must agree on the new modified terms before they can go into effect.

Before you even get involved in the mortgage modification process, see what you can do in your own life to better your financial situation. The more money you have to offer the lender on a monthly basis, the better chance a modification will be accepted. Do what you can to bring more money in each month and cut unnecessary expenses. There are non-profit counseling services to guide you in these endeavors.

If you determine that you can make no further cuts in your budget and you still cannot make your mortgage payments, you need to meet with your lender to negotiate terms. The fact that you have attempted to reduce your bills to the bare minimum may help to persuade the bank that you are serious about saving your home. Talk with them directly to discuss their specific mortgage modification requirements and whether you can qualify.

Inform them truthfully and completely about your predicament and ask what may be possible to help you in your tough situation. The more information the bank or servicing company has, the more likely it will be able to evaluate your situation and present a reasonable solution. Lenders would much rather help you reach more affordable circumstances and still get some money from you than foreclose your home and be done with it.

Before you go into the meeting with your lender, compile an income and expenses report. In this, you must be able to prove that you are not spending money frivolously and that your income to necessary expenses ratio is in the negative. Most often, the bank will want to examine your recent spending habits since the time you have not been paying your mortgage.

There are several requests you can make of your lender. You might ask them to postpone your payments until you get on your financial feet again. This is most likely to be granted to if you had unanticipated expenses like medical bills that will pass and be over with in the coming months. Other options may be making partial payments for a period of time, or putting the missed payments on the back end of the loan.

If your current mortgage is an adjustable rate mortgage, or ARM, and it currently has higher monthly payments than fixed rate mortgages, request that your contract be altered and your loan switched to the plan with a lower rate. To be approved, you must show your ability to pay the newly modified amount. Many of the current foreclosures were caused by resetting ARM payments, and lenders have been willing to reduce interest rates to more affordable levels for qualified loan modification applicants.

The most important point to remember is that a lender will not go through the trouble of changing terms if you will still be unable to make timely payments. However, with a little bit of work, you can reduce your monthly bills and then get to work lowering your mortgage so you can hold onto your house for the long term. Soon, with proper communication and negotiation skills, you will be out of your predicament and back on more stable financial grounds.

If you live in Florida and are facing the possibility of having your home foreclosed, you are probably trying to find out as much about it as you can. Foreclosures are carried out through local court proceedings. The entire process begins when you fall at least thirty days behind on your mortgage payments, though you can usually go at least ninety days or longer without the courts becoming involved.

The lender of your mortgage initially files a notice with the courts. If you are under the impression your lender may have done so, you will know for sure when you receive a notification in the mail or delivered by a local sheriff's deputy. Do not ignore this important warning as if it were junk mail or simply a threat against your home that you can not respond to. You must respond to it within the period of time indicated on the notice.

If you fail to respond to your foreclosure notice in the given time allotment, the court will rule against you and award the lender a default judgment. This means the court can assign a sale of your home to satisfy the judgment, which includes the total amount still owed to the mortgage holder in principal, interest, fees, and court costs. Under Florida foreclosure law, you can still save your home at this point all the way up to the scheduled date for the sale of the home by acquiring enough funds to repay the lender everything you owe.

To give you an idea of how much time you have to get the necessary funds to pay your lender back, the scheduled date for the sale of a foreclosed home is usually between 20 and 35 days following the court’s decision. The originally set date is always subject to change based on the court’s calendar, locality and conflicting schedule times of the auction itself. Homeowners and banks can also work together to postpone a sheriff sale if there is a possibility of another solution solving the problem.

Notices are kept up-to-date weekly for at least two weeks and the official date and time is announced five days preceding the auction. This way, even though times and dates may change throughout the proceedings, you have a clear knowledge of the exact date five days in advance. This is an especially important deadline to keep in mind when negotiating with a lender for a loan modification, short sale, or other alternative to foreclosure.

If this is the point you are at right now with your Florida foreclosure, it is not too late! You can still get your home back by making your account current once again. Remember, this will probably include the payment of late fees and other charges your account may have built up in the time you were delinquent in your payments. You may be able to pay up the account by borrowing money from friends and family, cashing in assets, refinancing, or even just selling the house.

No matter where you are in the legal process of losing your property, you probably still have options. As long as ownership of the home has not been transferred, there may be solutions available. You can learn exactly how to go about stopping foreclosure even in these late stages by meeting with a financial and foreclosure expert. Be sure to choose a reputable source.

Happy New Year!

From,
ForeclosureFish.com
Your source on the web for mortgage help.

When you look at the current statistics of the country’s number of foreclosures when compared to a decade ago, you will understand why it is the topic of conversation between many homeowners, economists, and financial analysts. The numbers are frightening. Highly populated states with critical housing markets like California, Michigan and Florida have hundreds of thousands of foreclosures every month, while home values continue to decline by the day.

In the last year, 2.3 million homes in the country went through or are still going through some stage of the foreclosure process. Seven million families altogether are defaulting on their mortgages or are facing foreclosure. Currently, there are indicators that suggest housing prices may be on the rise in the short term, but with foreclosure rates as high as they are, the future of real estate still looks grim in many areas of the country.

Four years ago, foreclosure rates were six times lower than they are now. The system currently in place to handle foreclosures was not designed to handle such outrageous quantities. Local government courts are falling behind in hearing cases and performing evictions, and it may take some banks months to initiate the process of taking back a home. Also, servicers are taking advantage of the panic-stricken atmosphere to make a profit.

If the mortgage servicing companies see to it that borrowers are unable to qualify for the Home Affordable Modification Program (HAMP), then they gain money from your foreclosure. Neither you as the borrower nor your lender have anything to gain from your home being foreclosed, so many people are pointing the finger of blame on the servicers, which receive more in fees when a homeowner is late than when they are on time in payments.

To put it in terms that many baseball fans may understand, the country is in the 6th inning of the foreclosure situation. The prices will not peak until the end of 2010 and will probably not return to normal until 2013. Traditionally, if the circumstances of the housing market were normal, most homeowners defaulting on their loans would find alternative means of paying and be able to retain their homes. In this climate however, more than 50% of the homes that begin the foreclosure process never make it out again.

Fortunately, a great number of homeowners are still able to escape foreclosure by means of mortgage modifications or short sales. While other methods such as selling outright or obtaining a foreclosure loan may not be as easy anymore, other solutions have begun to present themselves in response to the dire housing market. If you are in a stressful situation and hoping to find a way out of your situation, you may not be out of options yet.

Speaking with a financial expert can be the best way to learn of your options and begin taking the steps toward securing your place in your home once again. The future of foreclosures may not be so great in your area, but they can be great for you personally if you act now to protect your home, your finances, and your family from any coming economic depression.

When you are facing a possible foreclosure, the last thing you want is another misleading plan of action that results in little to no financial help for your situation. Fortunately, loan modification options do not fall into this category. Before you investigate too far into the process of altering your home mortgage, you surely want to grasp as much information about the concept as you can.

What a loan modification is exactly is a permanent change to a term or several terms in your home loan agreement. It allows a loan to be reinstated, resulting in a lower monthly payment you can afford. Obviously, with this basic definition, it is possible to use loan modification to save you from foreclosure in a number of different ways.

The United States government is very aware of all the financial hardships of the country (after all, it caused many of them through the use of the Federal Reserve system). For this reason, they have laid out plans for government programs to help you obtain a loan modification under certain circumstances. Seventy-five billion dollars have been set aside to allocate to subsidized lenders who are willing to work with borrowers to modify their loans.

This program was designed to give banks a financial incentive to help you stop foreclosure before the home is listed for auction. Plus, if you pay your newly modified payments in a timely manner, you will become qualified to earn up to $5000 in credit toward the loan balance.

To find out if you are eligible for a mortgage modification, the first thing your lender will consider is your ability to make a modified payment currently as well as in the future. You must have proof of income and complete financial statements with details concerning your income to expense ratio, proving your monetary incapability of making your current loan payments. A hardship letter explaining your financial hardship is also required.

This documentation proves your need for a modification and hopefully your capacity for paying the modified amount should you be granted your request. You do not have to already be delinquent on your payments to qualify, as part of the purpose of the government plans is to help borrowers before they fall behind. Previously, most lenders would not negotiate with borrowers until they had fallen behind by several months.

If, however, you have fallen behind and missed payments, you can of course also qualify. Your missed payments can be added back into your loan modification in a dispersed manner, spreading the missed payments out over the term in order to bring your loan payments current. They can also be added to the back end of the mortgage, so you pay them after the end of the loan's current term.

Getting started and working out the details concerning your possible loan modification option is not always easy, but can be done by almost any homeowner. What you need is the right important information to help you fight foreclosure, and getting over a foreclosure without losing your home is a great start to get you down the road to financial freedom.

If you have defaulted on your home loan, meaning you have become unable to make timely payments for whatever reason, you may be facing the possibility of foreclosure and eviction. This is when your lender whom you took out your loan with seizes your property in an effort to recover principal on the investment they made when giving you the loan to purchase or refinance your property.

This takes place if you have fallen behind three or four months on your mortgage payments. Sometimes a homeowner may have unbearable expenses one month but see that they will recover in the coming month. Other times a devastating financial blow means extended inability to make loan payments on your home. In most cases, lenders will wait at least a few months before threatening to begin the foreclosure process.

Seeing what you can do now to stop a foreclosure on your California home is better than waiting to see if your financial situation improves. If you cannot recover from your monetary hardships and your home is foreclosed, you must vacate the premises once the house has been either sold at auction or repossessed by the lender, according to the California foreclosure laws.

This can be a devastating situation for anyone, but is made even worse for families still suffering from a hardship. However, California also has some of the most Progressive laws in the country regarding mortgage help and how the process is followed. As a homeowner facing possible foreclosure in California, there is important information you need to know about concerning the new laws in the state.

Fortunately, if you are facing the possibility of foreclosure, this new law may actually assist you in preventing foreclosure on your home. In June 2009, Ellen Corbett, a Democratic senator from San Leandro, rewrote the code regarding California foreclosure law, mandating that lenders in the state must give notice to their borrowers a minimum of 30 days prior to the start of the whole process.

Also, if the lender has done nothing to work with the borrower in making affordable changes in agreement terms before sending the notification, a 90-day cessation on payments must occur during the foreclosure process. However, it is important to be aware of the fact that lenders often put forth the least possible effort to help clients, so homeowners should still actively work on negotiations with the bank.

The latter portion of this new law has some people arguing that it is not constructive to allow non-mortgage payers to remain in their homes for 3 months without making a payment. Others say it is a perfect addendum to the initial portion of the law, giving homeowners some time to work out a plan to survive the enforced sale. The only thing that we can bet on, though, is that the cost of obtaining a mortgage in California will go up as a result of this new risk the banks will be taking on.

As always, homeowners should take advantage of every opportunity to save their homes or avoiding eviction, including making other living arrangements or working with a reputable lawyer to file bankruptcy or negotiate a loan modification. No matter what people are saying about the new California foreclosure law, it is a reality and one you should inform yourself about if you are a resident of the state.

The question on many homeowners’ minds is made in regards to foreclosure rates. Are they still rising? Where does the country currently stand in this foreclosure crisis? Most people asking these questions understand that the government has its hand in trying to solve the problem, prop up home values, and improve statistics.

Government bailout plans have been in place since October 2007 and another was released early in 2009, yet the national foreclosure rates have continued to increase in many places. Some cities and states are seeing decreases, but many experts are skeptical as to their permanence. In fact, some experts see an even more dismal housing market in the near future.

The problem lies in the vicious cycle associated with some people being in financial trouble while others want to prevent it from happening to them. You may be facing foreclosure, but your lender has many borrowers that may be in the same situation. If they make exceptions for everyone, they may end up putting themselves in the same dire straits. Thus, lenders have been somewhat unwilling to realize the huge losses they have sustained on their mortgage investments, and have been turning down workout programs as a result.

Because of the knowledge of this fact, a new government incentive plan has been put into place to encourage attorneys to help delinquent borrowers qualify for alternatives to foreclosure. Such options include loan modifications, affordable repayments plans or other compromises that both lenders and borrowers can agree is fair. After all, if your home is mortgaged, your lender discontinues receiving payments from you, and that is not what they want.

Back at the end of 2007, the United States Treasury Department was already putting together plans in an attempt to nip rising foreclosure rates in the bud. Unfortunately, there is clearly a flaw in the plans they have laid out as the number of homeowners who fall behind on their mortgage payments continues to rise. The reason is because no resources were made available in the assistance of the growing number of borrowers and the delay in aid led to even more foreclosures.

As the plans currently stand, there are at least five different bailout programs to assist in decreasing the rate of foreclosures nationwide. These include Hope Now, Project Lifeline, the Hope for Homeowners Act, the Home Affordable Modification Program, and the Home Affordable Foreclosure Alternatives plan. Thus far, none has been as successful as initially expected and hoped for.

The argument made by many financial experts is that the reason these programs have failed to have the impact hoped for is because they are cheap-money policies. All they have really accomplished is a greater downward pressure on the state of the economy. With localized improvements in foreclosure rates, many hope the limited number of improvements will increase throughout the nation.

Merry Christmas!

From,
ForeclosureFish.com

Payday loans can cause a lot of financial trouble when not used correctly. In general, these types of loans are meant to be a short term loan that can be paid back in full on your next payday. In this type of scenario, they can be very useful and potentially save a lot of money when you avoid late fees or other fees that could result from not paying other bills on time.

The problem with a payday loan is when you take out a loan that can not be quickly repaid. When the loan is not paid back immediately, most contracts allow the lender to charge huge interest rates and additional fees on a weekly or daily basis. If you fall into a situation where the loan can not be paid back, you will quickly find yourself in a load of trouble.

Payday loans can be used for basically anything you want. Many people use these loans to make payments that would be missed otherwise. In these cases, it is important to weigh the late fees versus the cost of the payday loan.

Many people do not realize this, but if you are late on one of your credit cards, just once, the card companies can immediately jack your rate up to almost 30% on all your cards, not just the one you were late on. This is such a problem that laws are being enacted to prevent this practice. In this type of scenario, missing a single payment could cost you (literally) thousands of dollars, so paying a small fee to borrow money now would make perfect sense.

Another scenario is when you are going to miss a house payment and cause your home to go into foreclosure. When this happens, usually on the third missed payment, your lender can make the entire loan due immediately. This is another case, where a small loan fee may be a necessary evil to avoid a huge disaster. With the new government foreclosure bailout plan, you can not miss any mortgage payments if you want to qualify. Keeping your mortgage on time in order to get a lower payment with a loan modification is a pretty good idea.

The key is using a payday loan when necessary and finding another solution when it is not. In my opinion, buying groceries to feed your family might be okay, but getting a loan for dinner and a movie, or a case of beer is not. Be smart about your purchases and only spend borrowed money when it is a necessity.

In any situation where you will be borrowing money, make sure you completely understand the terms of the loan and read all the documentation that goes along with it. Never agree to something you do not understand and never agree to borrow money when you do not know how you will be able to pay it back.

With all the foreclosure problems and people behind on payments, it is hard to not think about foreclosure when you are getting a new loan. It's always frightening when you are signing mortgage or loan papers, because it's a long term commitment and in many cases, it might be a little more than you can actually afford.

Many people agree to a new loan when it is not affordable, because they tell themselves that they will cut their expenses in other areas. They think they will eat out less, or not go shopping as much, just to make the new payment affordable. The truth is, cutbacks like these are not realistic. People are still going to go shopping and they are still going to go out to eat.

A better plan is to increase your income, or to find a loan that can make the payment more affordable. By shopping around for a new loan, you can find the best interest rate and the lowest fees. Many people do not realize this, but a better interest rate and lower fees can reduce your monthly payment by hundreds of dollars.

Using a home mortgage is a good example. Every lender has a different set of fees and offers a different interest rate and term. Without shopping around, you may think you are getting a good deal, but in reality, you could save thousands of dollars per yes.

Example – lets assume you are getting a $250,000, 30 year mortgage.

Lender A – If lender A offers you a 5.75% rate, has 3% in closing/broker fees, your payment would be about $1,500.

Lender B – Lender B has a special rate of 5.25% and charges a more reasonable rate of 1.5% in closing fees, which makes the monthly payment about $1,400.

The difference between both lenders does not seem much different, but over the life of the loan, Lender B would save the home owner $36,000! That difference of $100 each month can really add up and it could cause the borrower to miss a payment at some point in the future. You would be surprised how many people could stay out of foreclosure if their mortgage payment were only $100 less.

No matter what type of loan you are looking for it's always best to shop around and find the best deal, but make sure you look at more than just the interest rate. In many cases, you could get a lower rate, but still end up paying more because of the fees that are charged on the loan.

When you are comparing two mortgage, make sure you look at the actual annual percentage rate (APR), not just the quoted interest rate. This will include all the fees and show you the true cost of the mortgage. This can be found on the Truth In Lending Statement that is required for all mortgages.

If you already have a mortgage and feel like you have been taken advantage of, or if you have had a hardship that is effecting your ability to repay your mortgage, then a loan modification can be used to lower your interest rate. This is when your existing lender modifies your mortgage interest rate or term to make it more affordable. This process has become very popular in the recent years, and should be easily negotiated with your lender.

As credit card companies continually increase rates and gouge their customers, debt settlement or debt management is becoming more popular. Debt settlement is the process of eliminating a portion of the debt and establishing a repayment plan that will get you debt free in just a matter of months or years. Most credit card debt could take nearly a lifetime to pay off, so seeing relief in just a few months or years is a huge opportunity for most people.

But debt settlement is generally only for unsecured debts. Other debts, such as car loans, or mortgages are not included. This is because these types of loans have collateral to back them up. If you do not pay, the lender will simply take away the car with a repossession, or the home, with a foreclosure. One option to eliminate these debts or to pay them back on a more affordable schedule is bankruptcy. The main problem with bankruptcy is the amount of time it stays on your credit. In most cases, debt settlement and a loan modification would be considered better than bankruptcy.

A loan modification is similar to debt settlement in that a portion of the mortgage debt may be eliminated and new repayment terms are structured to make the payment more affordable. This can be done by extending the term of the loan or lowering the interest rate. A mortgage modification is considered one of the best alternatives to foreclosure if you want to keep your home. It will make your home affordable again and has very little effect on your credit. In fact, it should begin to improve your credit, assuming you have not done anything else to mess it up.

To qualify for a loan modification, you will need to prove that you have experienced a hardship and that a modification would make your mortgage payments affordable for the remaining life of the loan. Many lenders will want you to be behind on payments before approving a loan modification, but that is not required. Even if you are current, if you can show that the payment is not affordable, a good negotiator should be able to get it approved.

A loan modification should be applied for at the same time as debt settlement. Ideally you want to show all your creditors improving your payment terms. Asking all your creditors to improve a little, is easier than asking one of them to reduce their payment a lot.

In any situation, your credit will be effected to some extent, but when you are no longer able to make your payments, ,or if you have already missed payments, then you wont be approved for new credit anyway. Most people only use their credit once every 4 years, so this will give you plenty of time to improve your credit and become debt free. This is much better than a bankruptcy that can remain on your credit for 10 years.

A number of lenders have recently announced that they will be suspending evictions and foreclosure notices for the holiday period.

The two government-owned mortgage enterprises, Fannie Mae and Freddie Mac, announced last Thursday that they would be holding off on evictions of homeowners from December 19th through January 3rd.

The large bank Citigroup also announced on Thursday that it would be suspending foreclosure notices and evictions for a 30-day period in order to provide homeowners with some welcome relief during the holidays. Citi is expecting that this will affect nearly 4,000 borrowers.

These announcements ensure that at least a few thousand borrowers will be able to enjoy the holidays while not worrying about the foreclosure process rolling on and the potential of an eviction close to Christmas or the 2010 New Year.

More news is coming out about the president's Home Affordable Modification Program, and none of it is good. Previous bad news has included the low number of borrowers who have received loan modifications compared to the large number of applications in the system, and the delays that lenders have been making in approving plans.

The latest development, as reported by McClatchy in this story, shows even more negative results for the government's program. As the article states, "many struggling homeowners are holding up their end of the bargain but still find themselves rejected, and some are even having their homes sold out from under them without notice." This sounds like the standard operating procedure for most banks.

Borrowers who have applied for help and been given trial modifications by their lender should not consider themselves saved from foreclosure. On the contrary, the trial period is just like the trial period for an adjustable rate mortgage. While homeowners hope that they will be able to keep making the payments, the bank uses the introductory time to collect as much money as possible and then take the home back. It is fraudulent inducement of debt, the tactic used by banks for decades.

It should be amazing that, with the low approval rates of the mortgage modification program, anyone who makes it through the trial period can be put back into foreclosure. "To date, more than 759,000 trial loan modifications have been started, but just 31,382 have been converted to permanent new loans. That's averages out to 4 percent." If a significant number out of those four percent are still losing their homes, what does this say about the banks' underwriting standards?

Even more disturbing is that people are having their homes sold out from under them with no notice -- and this is by design in the plan! "In the fine print of the form homeowners fill out to apply for Obama's program, which lowers monthly payments for three months while the lender decides whether to provide permanent relief, borrowers must waive important notification rights." One of the problems with the foreclosure crisis has always been the human element -- people fall behind due to hard times, news stories cover the hardship, the family is evicted.

Obama's plan, by having borrowers waive notice requirements if the bank wishes to continue foreclosure, gets around the human interest stories by "rewarding" homeowners with trial modifications and then letting banks auction off the houses without notifying the owners. Banks can reject borrowers without notification and then set the property up for a sheriff sale.

Putting a property up for auction after a client has successfully completed a trial modification is little other than (more) fraud committed on borrowers by the banks. The lenders advertise the modification as a plan where owners can make three payments on time and then have their mortgage lowered and payments reduced and escape foreclosure. The reality, however, is turning out much differently.

Lenders are able to collect the three payments and then reject the borrowers for a permanent modification, even if the payments were made on time and in full. The bank can reject the homeowners with no notice, start the foreclosure process up at the point where it was left off before the trial modification, and have the property sold at auction without notice.

Is this the type of result that President Obama and his financial advisers wanted when they implemented the Home Affordable Modification Program earlier this year? Or was this loophole written by the banks, for the bank, for the purpose of offering too-good-to-be-true modification to borrowers in order to fraudulently induce them into making three extra payments before losing their homes for good?

The most recent government program to help homeowners facing foreclosure has been President Obama's Home Affordable Modification Program, also known as HAMP. Despite its initial failures, the government has just recently announced an expansion, called the Home Affordable Foreclosure Alternatives program (HAFA).

While HAMP was designed to assist borrowers in obtaining affordable loan modifications, the new plan is supposed to provide new guidelines for mortgage lenders and servicing companies for the short sale and deed in lieu of foreclosure process. Obviously, the HAMP plan was so effective in delaying foreclosure for a few months that now all of the people losing their homes again will just be giving them up.

The new directions provided by HAFA will supposedly streamline how banks proceed with short sales and deeds in lieu. These options are mainly used by homeowners who have little other choice than to give up on their properties and would rather not just walk away from them. Below are some of these new guidelines.

First, all homeowners must be evaluated under the guidelines of HAMP before being offered any of the plans under HAFA. This means that borrowers must first apply for a loan modification and will only be given the option of a short sale or deed in lieu if they are unable to qualify for a modification.

Under the Home Affordable Foreclosure Alternatives plan, short sales are allowed if pre-approval was granted before the house was listed on the open market. The homeowners will be released from the potential of a deficiency judgment, as well. These guidelines are meant so that servicing companies can no longer negotiate to have real estate commissions or other fees reduced on a short sale. Servicers can only negotiate commissions before a property is listed for sale.

An executed sales contract for a short sale between the buyer and seller must be submitted to the lender or servicer within three business days. The servicing company has ten business days to respond to the offer with either an approval or rejection. This may be significantly faster than the months-long process banks now use in reviewing short sales, but more lenders may be likely to turn down offers if there is not enough time to review them.

There are also net proceeds directions that lenders must follow. If a sale meets the minimum net proceeds required under the program, the offer must be accepted. As long as the bank is getting a certain percentage of its money, it must take the deal. Servicing companies and banks no longer have any say in whether they can accept such offers.

Servicers that participate in this program will also be required to create and follow written policy guidelines. These directives should state how it will offer homeowners alternatives to foreclosure under HAFA.

The HAFA program will go into effect on April 5, 2010.

With all of the new programs and ideas that the housing industry and government are trotting out to help homeowners save their properties from foreclosure, it seems new terms and acronyms are being invented everyday. One of the most confusing that has come into common acceptance is a "forensic loan audit," which is being sold to many borrowers.

But what is a forensic loan audit, exactly? Banks will not just accept one of these as a solution to foreclosure, so why are homeowners being sold more and more of them? These are the questions that any company selling such services must answer when speaking with foreclosure victims who are trying to use their scarce monetary resources in the most effective manner.

A forensic loan audit is a detailed examination of the original loan documents, from the closing of the real estate transaction to any refinances, second mortgages, and transfers of servicing rights or ownership of the note between lenders. The goal is to find enough mistakes or evidence to show a possible predatory lending case against the bank.

The main reason to obtain a forensic loan audit is to show the lender that it would make much more sense just to modify the mortgage than to foreclose on the home and risk a lengthy defense. If the borrowers can show enough mistakes were made on their loan, it will become very difficult for the bank to get a default judgment and move quickly towards the sheriff sale of the home.

Thus, a forensic loan audit is more like an insurance policy than anything else. For a few hundred dollars, homeowners can go to their bank, show them how difficult it would be to pursue a foreclosure lawsuit, and then negotiate for a loan modification, short sale, or other alternative to foreclosure instead.

Forensic loan audits are most recommended for homeowners who are dealing with a particularly difficult bank. When they are unable to move forward in negotiations and the lender is not communicating, the process may need to be pushed forward. A list of mistakes and evidence of lender misconduct may be just the impetus the bank needs to keep working on a solution.

A loan audit would also be helpful for borrowers who are negotiating with the bank on their own. Those represented by an attorney or third party may not have to worry as much about this product, but those homeowners dealing with the bank themselves may need an extra bargaining chip. In some cases, such an audit can be extremely helpful.

One of the great concerns shared by many homeowners who have missed several mortgage payments is what options are available to them, and how each option can affect their credit rating. While these borrowers know that their credit has deteriorated severely due to the foreclosure situation, they also want to preserve as much as possible their chances of borrowing money in the future.

Loan modification is the latest trendy method to stop foreclosure, with numerous government programs subsidizing lenders and homeowners. Thousands of foreclosure consulting firms offering to help borrowers negotiate with the banks (for a fee) have also cropped up all across the country.

While modifying the terms of a mortgage can be a great plan for some borrowers, few people have really questioned how a modification will be reported to the credit agencies. They are somewhat similar to refinancing a home, entering into a forbearance agreement with a lender, and even filing a Chapter 13 bankruptcy.

Government rules, until very recently, have also been unclear as to how lenders should report a loan modification on clients' credit histories. Some banks would have the record state "paid as agreed," while others would designate the payments as "partial payments." Some would even just keep the loan in a state of "foreclosure" until the temporary modification or repayment plan was completed.

All of these different approaches had widely varying effects on a borrower's credit score. Having a loan shown as "paid as agreed" was obviously the best solution. Partial payments is considered a negative to prospective lenders and would cause a decrease in the credit score. Having a credit report show a foreclosure would be almost as bad as just having filed bankruptcy and discharged all of the debt.

To address all of these different approaches the lenders were using, the government implemented another new regulation to impose a consistent reporting requirement on the industry. This new rule applies to all government-subsidized mortgage modification plans, and it went into effect on November 1, 2009.

The new rule requires that banks report a mortgage modification to the credit rating agencies as "loan modified under a federal government plan." Another requirement is that this designation will have no effect on the borrower's credit (FICO) score. This is partly due to the relatively small number of people who have received a modification to avoid foreclosure.

Once there are more mortgages with the federal government designation, then the credit rating agencies will be able to decide how to change the debtors' scores. This will require more modifications to go through and past ones not to redefault back to foreclosure status.

One piece of the loan modification or refinancing application that homeowners typically get wrong is the hardship letter. Every lender that is considering giving the borrowers an option to escape the foreclosure process will require a detailed letter explaining what initially caused the missing of monthly payments, as well as what actions have been taken to solve the problem.

Many homeowners, though, write very short hardship letters that explain almost nothing about what happened, what has been done to correct the situation, and why the financial crisis was only temporary in nature. In reading dozens of these letters over the years, it seems that many borrowers do not understand what to include when writing the bank.

The most important part of the letter is the description of what happened to cause the crisis. This should be as detailed as possible, because lenders will want to make sure that it was an actual hardship that caused the borrowers to fall behind in payments. Something like a layoff or huge medical expense will be given more credibility than a sick cat or broken TV that was replaced.

Proof in the form of documentation should be included to support the description of the hardship. Letters detailing the layoff or copies of actual medical expenses can be faxed to the bank with the hardship letter to show the severity of the problem. Proof should also be included of any solutions to the crisis, such as pay stubs from a new job.

It is also vital that homeowners include dates and time frames during which aspects of the situation occurred. Banks do not want vague descriptions of losing a job and then finding one. They want to know what month the hardship happened, then what was done in the meantime while payments were being missed, then when exactly a new job was started.

Finally, homeowners should include a specific call to action that they want their bank to take. Whether it is modifying a mortgage or accepting a deed in lieu of foreclosure, unless the bank knows exactly what the borrowers want, they may not know what to do with the workout application. Being clear about their intentions with the home is the best way for owners to communicate with lenders.

The hardship letter is a vital piece of the package of documents that lenders require before negotiating with homeowners. Homeowners should take the opportunity to explain what happened to cause them to fall behind in as much detail as possible. This is their chance to explain that they are not deadbeats and deserve a second chance to keep their home.