If you are a small business owner or homeowner facing a financial hardship who is behind on monthly mortgage payments, you might want to consider a loan workout. No, this does not mean you or your loan will be spending any time together at the gym.

A loan workout is when you and your lender renegotiate some aspect of your loan. Every aspect of a mortgage's terms is eligible for renegotiation. You could attempt to modify the interest rate, the monthly payments, the payment schedule, or other terms of the loan.

When possible, it is always best to approach your lender for a loan modification prior to having to miss any mortgage payments. If you are already behind on your payments, do not let this keep you from still contacting your lender to try to work out a solution that will let you keep your home.

It is important to remember that this should be viewed as a tactic to buy a little more time for your business or to repair your financial situation. You should only consider this option if you will really be able to continue making any payments for the long term. If your financial situation is expected to keep deteriorating, you should consider looking into other options.

While thinking about approaching your lender to discuss a loan workout can be intimidating, most lenders are open to this idea and really do want to help. It is not good for you or them when someone has to foreclose. This is especially true in today’s economy.

The Mortgage Bankers Association (MBA) has been encouraging lenders to work with homeowners and small businesses ever since the number of foreclosures increased dramatically. During the Bush administration the HOPE NOW association was established to try to help small businesses refinance their loans and freeze interest rates.

However, you will want to do some work prior to meeting with your lender in order to make the process more smooth. The primary aspects of your personal financial situation the lender will be investigating during this process include the following.

1. The causes of the financial hardship are possibly the most important aspects of your situation the lender will want to examine. Most lenders will want an explanation of how the financial hardship was created and how those problems are going to be resolved.
2. You will need to be able to prove to your lender that you will be able to actually pay off your loan and stay in business after the loan reconstruction. To do this, you will need to provide proof of income for the short term (about 3-6 months) and for the remaining length of your loan. Lenders want to know that you are not going to have to go through this process again in a few years.
3. How much is actually still owed on the property is also important for lenders to determine how much to modify a loan. This is usually not counting the interest that has accrued from late payments. You will want to ensure that your figures match your lender’s.
4. What is the property currently worth? It is a good idea to have the property’s value assessed by a qualified appraiser before meeting with the lender. You could also use a Realtor who is not associated with either you or your lender for a price opinion.
5. What is the benefit for the lender? Remember, mortgage lenders are looking out for themselves. So be prepared to tell them why they should agree to a loan workout. The simple answer is because otherwise you will have to foreclose on the property.

When you allow your home to go into foreclosure, the bank or mortgage servicing company no longer receives your monthly payment and has to try to sell the property for what you owed. This most often results in a profit loss for them.

You should be prepared at this point to suggest possible solutions to the problem yourself. You could even draw up some potential short-term solutions including payment schedules for various repayment plans and show how they benefit both you and the lender.

Enlisting the aid of an auditor, accountant, or a loan consultant for this stage is an excellent idea. Many companies and law firms now offer these types of services to homeowners facing foreclosure. This will help ensure you are not suggesting anything that a lender would find outrageous.

Once you have contacted your lender to suggest a loan workout, they will often send in a workout team to assess the problem and determine the course of action that would be best for their company. In the best cases, what works out for the bank will also be in the interests of the borrowers in saving the home.

Remember, just because your financial condition is in trouble, you do not have to accept just any terms offered by the lender. You must be aware of exactly what you need in order to stay in in your home and prove this to your lender. It is always possible to negotiate for a better deal.

Make sure that any offers made by the lender and any changes agreed upon are put in writing prior to leaving the negotiations. This may mean that you will end up with completely new loan paperwork at the end of the process, depending on how heavy the modifications are to the original mortgage.

The bottom line is you do not necessarily have to close shop and move out of your home just because you are struggling to make your mortgage payments. A loan workout can be a viable solution that will stop foreclosure and is worth the effort required in negotiating with the mortgage company.

One question that every homeowner seems to have is, "How do you stop foreclosure?" Once the process is started, it is hard to put on the breaks. The best thing to do is to make every effort to prevent what can become a snowball rolling downhill.

So, how do you prevent a bank from foreclosing? The first step is to contact them. When you realize that you will be unable to make your regularly scheduled payment, call the bank or mortgage company and explain the situation to them.

If you have been laid off or hit with a large unexpected bill, tell them about your problem. Do not be afraid to let your lender know about the situation as soon as there is a change in your financial conditions. The bank may be able to help you out.

Once you have a new job, you may be able to qualify for a restructured or modified loan. In March, the government created a program that offers incentives to banks that offer refinancing or adjusted mortgages to their customers, as an alternative to foreclosing.

Although the results for government modification programs have been mixed so far, the Treasury Department says that 3% of customers that are 60 days behind on their mortgages have signed up for trial modifications. This means that means their payments have been reduced or other terms of their loan changed to make it more affordable.

In order to stop foreclosure, using loan modification, you will need to provide proof of employment, two recent paystubs and a copy of your last tax return. Basically, it’s the same paperwork that you should have provided when you signed up for your original mortgage.

The bank will still be concerned about whether or not you can afford a lower payment. According to the experts, lending practices over the last few years were somewhat predatory. People were qualified for mortgages that they could not afford. The idea of the new programs is to make mortgages more affordable, usually by lowering interest rates. But, hard as it may be to accept, it is possible that you have been living beyond your means.

It may still be possible to stop foreclosure by selling your house. Finding a buyer takes time, of course. But, some companies are willing to buy houses in any condition in order to speed up the process and help people get out of a financial bind.

There are also services that offer help with negotiating. Some of the services are free, while others charge a fee. You could sign up for credit counseling. This is a particularly good idea if you have a lot of unsecured debt that may be sold to predatory collection agencies in the future if it is not paid off.

If you qualify for refinancing, that may turn out to be your best option to stop foreclosure. The new government guidelines make it easier to qualify, in that the value of your home in relation to the loan amount is not a consideration. You will need to sign an affidavit of financial hardship, meaning that the cause of your financial problems has been a loan payment that was unaffordable.

If your interest rate is high, a loan modification could save you hundreds of dollars per month. Your lender should be able to tell you whether or not you qualify, what documents you have to provide to start the process, and give you an idea of how much lower your payment will be.

As the months go by, it becomes much more difficult to stop foreclosure. In some states, the lenders have the right to foreclose very quickly. Thus, in order to have the best chance of saving the home at the least cost, it is important to act fast.

If you have lost your job or become disabled, you may have insurance that will pay your payments until you find a job or become able to work again. In fact, some people sign up for this type of insurance without actually realizing it. But if they never make a claim, the insurance never pays out, and they lose their homes in the end.

So, in addition to contacting your lender, contact the company that insures your home. If you are able to refinance, consider adding that type of insurance to your policy, if you don’t already have it. It has prevented many people from losing their homes.

While it might take some work on your part to avoid foreclosure, you have more options than ever before. So, don’t give up. That’s the worst thing that you can do. Do not be afraid to ask for help. Contact friends, family members and your church. It is not unusual to feel overwhelmed or depressed.

Try to remember that lenders are more willing to work with their customers than they have been in the past. Many of them are trying to repair their reputations. So, they may be willing to halt foreclosure proceedings, if you take the time to ask.

If you need foreclosure help, the first step is to contact your lender and explain your situation. Letting them know that you are making an effort to resolve the situation, even if it is not through one of their programs, may delay the process.

If you do not stay in touch with your lender, you might only have a few months left in your home. The laws vary from state to state. It is important to find out what the law is where you live. In some states, such as Texas, lenders are allowed to begin the process after you miss a single payment.

On the other hand, the banks are not allowed to harass you. Once you have contacted them and explained your situation, you should not receive numerous harassing phone calls. As with other creditors, they are not allowed to call you at work.

When you do call your bank, make a note of the date, time and the person with whom you spoke. These notes could come in handy, if you need or want to file a complaint, or if you are defending against a foreclosure lawsuit and need to show how you have attempted to work with the lender for a solution.

Because of the new government guidelines and because home values are falling, many banks are offering foreclosure help to their customers. It makes more sense for them to keep you in your home than it does to foreclose. But, that does not mean that you have the upper hand.

The banks have been advised by the FDIC to thoroughly review each customer’s financial condition and creditworthiness, before approving a refinance or mortgage modification. The FDIC is concerned about all of the banks that have failed in recent months. The closures cost the FDIC billions of dollars.

It may be worth your while to investigate options, such as companies that offer foreclosure help. Some companies are willing to buy properties quickly. More than likely, your desire is to stay in your home, if at all possible, but if your mortgage is really unaffordable, you have to be realistic.

Some financial experts say that renting is a better option right now, anyway. That might not be something that you want to hear at the moment but keep it in mind as you are looking at your alternatives. They say renting is a better choice because home values are falling, while other investment options are still profitable.

If your bank does offer foreclosure help it is probably due to the Making Home Affordable program that was launched in March 2009. Under the plan, millions of homeowners are supposed to be able to get lower interest rates, a waiver of late fees and sometimes an adjustment in the principal portion of their mortgage.

In years past, refinancing to get a lower monthly payment was not always possible. Banks often required that a customer have thousands of dollars worth of equity in their homes. Loan modifications as they exist today were not available.

Not all banks are offering modifications. Estimates vary about how many banks are offering the option to their customers that need foreclosure help. 3-13% of mortgage companies’ delinquent customers are currently in a trial period for modification.

The 3% estimate comes from the US Treasury Department. The 13% comes from US bank, who says that the Treasury Department’s estimate is an error. Regardless of which estimate is correct, at least we know that some people are taking advantage of the loan modification program, which should reduce the number of foreclosures significantly.

If you do sign up for a modification, you can expect some red tape to get through during the process. Tens of thousands of customers are applying for refinancing or modification. As a result, there is something of a bottleneck in many banks.

But, if you need foreclosure help, you should not let a little red tape deter you. A foreclosure could destroy your credit rating, making it impossible for you to ever purchase another home. Unless you are a very young person, it could be close to impossible to restore it in a timely manner.

If dealing with your bank seems to be particularly difficult, there are some companies that will handle the negotiations for you. This includes making many of the phone calls and spending the hours on hold that it can take to contact a bank. It is a specialty that has been around for years, although it is not well known.

Despite the government’s foreclosure help programs, many people are rejected for refinancing or modification. But with the right help and advice, as well as an honest look at your current financial situation, you will be one of the lucky ones.

Obtaining a home loan modification could help you avoid foreclosure and stay in your house for the long term. The guidelines for the “Making Home Affordable” plan were released in March of 2009. Since then, tens of thousands of people have applied, but in the state of Florida, hundreds have complained.

The majority of the complaints filed with the state attorney general’s office have been against Bank of America, but other customers have complained about other lenders, as well, including JP Morgan Chase and Wells Fargo, which acquired Wachovia. It is in the bank’s as well as the consumer’s best interest to modify, rather than to foreclose. But, there still seems to be a lot of red tape involved.

Consumers have reported waiting months only to find out that they have been denied. In some cases, they are accepted into the “trial” program. One woman reported paying her mortgage payments up through January of 2010. But, she was still denied for refinancing by her bank.

Although it may be a hassle, it is still worth your while to apply for a home loan modification if you are having trouble paying your mortgage or your other bills. If you are using credit cards to pay your utility payments or buy groceries, then your mortgage payment is probably not affordable. Ideally, it should be no more than 30% of your total monthly income.

If there has been a change in your monthly income since you first obtained your mortgage, that’s a good reason to apply. If your mortgage is backed by Freddie Mac or Fannie Mae, that is a good reason to apply. Most HUD loans qualify, as well.

The government has offered incentives to banks if they are willing to offer a home mortgage modification as an alternative to foreclosure. Despite the new programs, there have been thousands of foreclosures this year.

According to government estimates, about a half million people are in the trial stage of the process. During the trial period, which normally lasts for three months, homeowners are allowed to make lower mortgage payments. If they make those payments on time, then the bank will usually qualify them for permanent refinancing.

Fees that can be rolled into the new balance include legal fees related to initiating a foreclosure, Homeowner’s Association fees and bills that could cause a lien to be placed on the property. In order to use the home loan modification option, lenders are required to waive any late charges that have accrued. That alone could amount to hundreds or even thousands of dollars in savings.

Typically, the bank is able to reduce the monthly payment by lowering the interest rate. Rates as low as 2% are being seen in some of the new loans. If you are interested in applying, you should contact your current lender and stay in contact with them throughout the process.

Be sure that they have accurate phone numbers. Some banks have stated that they could not reach the customers and denied the final acceptance because of their inability to reach homeowners with the contact information the banks have on file.

As well, homeowners could still be denied because of insufficient income. There is no guarantee that anyone will qualify, but the government seems to think that most people will, as long as all of the parties are willing to meet somewhere in the middle.

It is important for borrowers to think about whether or not the new payment offered is actually affordable. It is possible that a home loan modification is not the right choice in certain circumstances. It might not be the right choice for the bank, either.

The banks must follow the FDIC guidelines when they are making these modifications. The number of bank failures this year has hit the highest point since the savings and loan crisis of 1992. Those failures have cost the FDIC billions of dollars. So, they have a say in whether or not your bank can offer a home loan modification or not.

One of the FDIC guidelines that your bank will adhere to is making a full review of your financial situation. If it appears that you are unable to make the reduced payments or if you are not considered “credit worthy”, they can deny your loan without risk of being criticized by government regulators.

If the government’s home loan modification program does not work for you, there are other options to consider. Although modifying the terms of a loan has been the most popular option recently, it is certainly not the only one available for borrowers attempting to stop foreclosure.

In the past couple of years, a lot of homeowners have found themselves in need of some mortgage help. With high rates of unemployment and stagnant wages, more people are finding making their payments harder each month. Priorities have to be set and the first one needs to be food for the family. And lenders don’t seem to be real sympathetic to the people in trouble. Let’s take a look at what kind of help is out there.

For the lucky ones that are not living in the areas with home values falling like rocks, refinancing might be the answer to their troubles. If a home owner bought their home when mortgage rates were high, then they might be able to refinance their loan at a lower rate. This would bring the payments down and for some this is just what they need.

But lenders are very squeamish to refinance anyone who has been laid off in the recent past. Even with a new steady job, their credit rating may have been affected by past due payments. But there is one point of good news. The federal government has released billions of dollars in aid to help these banks get over their nerves and to provide mortgage help to those that need it.

Then there are the unlucky ones. Millions of people live in houses that are located in areas where home values have plummeted like rocks off a cliff. In some areas values have fallen over 20% in the last two years. For those people who bought when prices were high, the luck ran out. Many of them owe more on their mortgage than what the house itself is now worth.

And then there is a pesky bit of business with mortgage lenders. They usually want to get all of their money back with interest. If one of the unlucky home owners falls behind in their payments, they have few options. Selling their home won’t bring in enough money to pay off the lender. For them, mortgage help needs to come in the way of mortgage modification. This is when the lender changes the terms of the loan to help the home owner.

What other types of mortgage help are out there? Well, if the home owner can find someone willing to buy their home, but not at a price that will pay the lender, they might be able to negotiate a short sale. A short sale is when a lender agrees to forgive any amount of money still owed on a mortgage once a home sale is final. Most lenders will not agree to this unless they have few other options. But the costs of eviction and foreclosure can be a good way to argue for it. And there are consequences to the home owner. Taxes can be due to the IRS for the amount forgiven by the bank. Another option might be to see if they can rent the home out for an amount that will cover their mortgage and taxes. But that can be tricky since many people don’t know the first thing about being a landlord.

A smart home owner can use a little known fact to their advantage to try to stop foreclosure by their mortgage lender. Did you know that it is cheaper for mortgage companies to keep you in your home than actually go through with a foreclosure?

On average it costs the lender between $50,000 and $100,000 to foreclose on a property. In the long run, it would cost less for them to work with the home owner to find a solution to the problem than evict them from their home. Often, the home owner has to be the one to point this out to the mortgage company though. It can be a very effective negotiating tactic.

Why does it cost so much to foreclose? First there are the costs of going through the legal process of eviction. The lenders have to hire local attorneys that specialize in these types of procedures. Then there are fees associated with filing the lawsuits and eviction proceedings.

If the home owners fight back, then the lender’s legal fees begin to climb faster and faster. Once a foreclosure or eviction notice is final then the mortgage company has to pay the costs of evicting homeowners if they refuse to leave the dwelling voluntarily. A lender with any intelligence would want to work with a home owner to stop foreclosure.

After securing the property from the evicted home owner, the lender is then left to deal with the aftermath. Often, if a home owner doesn’t have the money to keep up their mortgage payments, they also did not have the money to maintain the property either. And some of them, in anger over what was going on, do damage to the property before they leave it. All of this now falls on the mortgage company to deal with.

Whether the property was damaged due to neglect or spite, the lender will usually not do anything about it. This makes the value of the property fall and the longer it is neglected the further the value falls. In the end, the lender will receive far less for the property than what they would have if they had worked with the owners to stop foreclosure before it began.

Even if the bank does not do anything to maintain the property, they still have to deal with the other costs in owning that home. Any taxes that are due on the property have to be paid by the lender. And, some level of home owner’s insurance will need to be maintained on the property to protect the lender from accidents to the property. And when they try to sell the property, the mortgage lender will need to use local real estate agents.

That means they will be paying commission fees to them when the property is ultimately sold. It just makes no sense for a mortgage lender to incur those costs when it would be more effective for them to work with the current home owners. This is just one piece of information that can help you to save your home from foreclosure.

If you are in foreclosure now or far enough behind in your payments to worry about it, getting foreclosure help needs to be your first priority. The worst thing you can do is avoid dealing with your financial problems. One of the biggest mistakes people make is refusing to speak with their lenders when they call.

It will be hard to face up to the fact that you are in financial distress. But, if you don’t speak, then they will foreclose all that much faster. Facing the problem may be difficult, but you will have more options to deal with it if you face it now instead of later.

Find help. The federal government (as well as many state governments) has counseling options available for those who are facing foreclosure. These counselors can point you to government lending options that may help you. They can also provide you with information on what laws are in place about the foreclosure process. Each state has unique processes and timeframes on how the process is supposed to run.

Review your mortgage documents as well. There is usually a section in those documents that point out what your rights are as a borrower. You may think that the lender holds all of the cards, but that may not be all of the truth. Knowing where you stand legally is the first step in getting foreclosure help.

Take an honest look at your finances. Is there anything you can sell that will help you catch your loan up? A second car or whole life insurance policies are a couple of options to look at. Keeping a roof over your head needs to be a priority in your life at this point. Prioritize what you spend your money on. The mortgage payment needs to be the first item on your list of bills. Credit card payments and other unsecured loans can be put off for awhile, but mortgages should not be.

Can you get a second job for awhile in order to catch your mortgage payments up? Cut out all non-essential spending. Cable TV and high speed internet are easy points to eliminate. All of these options need to be explored. Knowing where you stand financially is the next step in getting a plan together to avoid foreclosure for the long term.

Avoid scams. There are tons of foreclosure scams out there. One common type is the scammer that claims to be an official representative for government programs that help homeowners in distress. Another tactic scammers use is to act as a middle-man between you and your lender. They will say that will negotiate to lower your interest rates or amount to be paid. In exchange though, you will need to make your payments to them instead of the lender.

Other scams include telling you to file for bankruptcy to stop the foreclosure or to sign over your property to them and they will make the payments for you in exchange for rent. Knowing what is real and what is a scam is a large step in getting foreclosure help.

Well worth the watch. Very creative and funny.

For mortgage companies pursuing a foreclosure, the costs can run exorbitantly high. Mortgage giant Freddie Mac has estimated that the average cost to a lender of foreclosing on a property is close to $60,000, with other estimates placing the total cost to the homeowner, lender, surrounding community, and local government close to $80,000.

Homeowners can use this knowledge when the attempting to negotiate with a lender for a short sale, mortgage modification, or any other solution. The point of loss mitigation, supposedly, is to reduce the loss on a defaulted loan by working with the borrowers to prevent it from going into foreclosure. Knowing how much foreclosure costs the lender is a powerful piece of information for homeowners.

But there is a big difference between paper losses and out of pocket expenses for lenders. Some of the losses on a foreclosure fall into one category, while the remaining fall into the other. Obviously, mortgage companies are concerned about out of pocket costs much more than paper losses that do not represent true outflows of money for the bank. So what costs are involved in a foreclosure?

Foreclosure sale fees. To initiate a lawsuit or begin a nonjudicial foreclosure, it costs the bank money for filing fees or newspaper publication of the sheriff sale. Many states require a lender publish a notice of default or notice of sale for 3-4 consecutive weeks, which the lenders have to pay for out of pocket.

Legal fees. Lenders always hire local attorneys to pursue foreclosure on a home, and attorneys, as most of us know, are not cheap. If the homeowners defend against the process for as long as possible, legal fees for the bank can run into the tens of thousands of dollars. While these are added to the total amount the homeowners owe, if the house is not saved, the bank ends up having to pay the attorneys out of pocket.

Eviction costs. The eviction process after a foreclosure and sheriff sale typically involves the bank initiating another lawsuit or paying the attorneys more to have the former owners removed from the house. Any of these costs, including any more filing fees or legal fees, will have to come out of the bank’s pocket.

Damage to property during foreclosure. Unfortunately, once homeowners know they will be foreclosed on and that the bank will no longer work with them to resolve the situation, they may take out their frustration at the bank on the house itself. There are always new horror stories of properties being gutted, stripped, or vandalized by the former owners. Repairs will either need to be paid for out of the bank’s pockets or taken as lower proceeds from a sale.

Damage to property after foreclosure. When properties sit abandoned, the best that happens is it falls into disrepair. Old conditions worsen and new ones appear due to deterioration and the effects of the weather. In the worst case, the home becomes a target for squatters who damage the property or thieves who strip it of its pipes, siding, and anything else of value. The bank will need to pay for repairs out of pocket or accept a lower sales price to compensate.

Property taxes. If the bank does not keep up with the local property taxes, it risks losing the house itself to a tax foreclosure. While taxes may be lower for non-owner occupied houses like those owned by mortgage companies, any taxes will need to be paid for each day that the bank owns the property. Once the property tax bill comes due, the lender will have to pay it out of its own pocket.

Homeowners insurance. Although banks may receive a far better deal for property insurance than what it forces homeowners to pay for through mortgage servicing fraud and other tactics, homeowners insurance will still need to be paid. This will come out of the bank’s own pocket, although the lender may own another company that provides the insurance, keeping the cost in house.

Maintenance. Keeping the property cleaned and maintained is one cost that banks typically avoid. Instead, they will allow the house to fall into disrepair and simply take less in proceeds on a sale. Although this is a paper loss to the banks, the longer the house is empty and not taken care of, the more it will deteriorate and the further the sales price will need to be to motivate any buyer to purchase it.

Commissions on sale. When a bank ends up as the owner of a property after a sheriff sale, it will typically find a local real estate agent to list the property with. Once the house sells, the broker will have to be paid a commission, reducing the lender’s proceeds from the sale.

When homeowners are negotiating for some solution to foreclosure, pointing out the vast costs to the bank may be one way to force the bank’s hand and offer a plan instead of going through with foreclosure. Even a $20,000 loss on the loan due to a short sale could represent a savings of nearly $40,000 to the bank in the long run. Banks threaten the loss of the house to homeowners if they don’t stop foreclosure — why can’t homeowners threaten the loss of $60,000 to the banks?

When attempting to get information from a lender or servicing company, homeowners can take advantage of their legal opportunities under the Real Estate Settlement Procedures Act to send a Qualified Written Request (QWR). A QWR is meant to help borrowers raise disputes with their mortgage servicer and have those issues resolved in a timely manner.

Homeowners, however, may not know what questions to ask of the lender, or why they are requesting certain documents or records relating to the loan and its servicing. Most questions revolve around various disputes that borrowers may have with a creditor, including amounts owed, dates when payments were made, and the nature of the relationship between the company collecting payments and the true owner of the loan.

For instance, borrowers may wish to request a complete payment history including the dates that payments were made, as well as the amount the lender claims it receives. Also requested could be a breakdown of how the payment was applied, whether to principal, interest, taxes, property insurance, late fees, suspense accounts, or any other charges.

For homeowners facing foreclosure, a breakdown of all charges and fees on the account could be disputed, for which a QWR may be appropriate. Borrowers could request that all of the arrears and charges relating to the foreclosure be itemized and justified by the servicing company. This can be an especially difficult request for the bank to fulfill, as many often just make numbers up for delinquent accounts.

Any change in the monthly payment should also be carefully scrutinized and disputed if the homeowners did not specifically agree to it. Even if they did, if the amount does not look correct, it may be worth disputing and having the servicer check into the account. Homeowners can request the mortgage company to explain how the new amount due was calculated and why it was increased.

When an account is delinquent, servicers may often receive payments from homeowners but not credit them to the payoff. Instead, they are placed in a separate suspense account that simply holds funds that may eventually be credited to the loan, but which are not helping the borrowers get current with the loan. Homeowners can request an itemization of the expense account in order to discover the current balance and why funds were placed into it.

As with any foreclosure situation, there will be a whole range of issues that are specific just to that particular case. Thus, the issues described above should not be taken as an exhaustive list of QWR questions at all. Homeowners will inevitably run into their own issues when attempting to stop foreclosure, and they will be able to craft their own Qualified Written Request letter to the servicing company in order to attempt to resolve any disputes.

One request that homeowners have a legal right to send to their lender is a Qualified Written Request (QWR). The Real Estate Settlement Procedures Act gives borrowers the right to dispute information contained in an account, request information from the servicer or lender, and have their issues answered by the company in a reasonable amount of time. Many times, the bank will not enjoy disclosing such information to the homeowners.

The main reason that banks do not like homeowners sending such requests is that there may be a significant problem answering the questions. Especially if the mortgage company has not kept adequate records, made material mistakes, or has engaged in a practice of fraudulent servicing, a QWR may shed light on these activities that can jeopardize the foreclosure case.

The following is an example of a Qualified Written Request. The list of requests made by the borrowers in this sample is not exclusive, and many more issues can be raised if there is a dispute. Homeowners should be aware, however, that they should only request information that is disputed, as courts may not look kindly on sending a QWR just for the sake of sending one.

[YOUR STREET ADDRESS]
[YOUR CITY, STATE ZIP CODE]

[YOUR LENDER]
[YOUR LENDER’S STREET ADDRESS]
[YOUR LENDER’S STREET ADDRESS 2]
[YOUR LENDER’S CITY, STATE ZIP CODE]

[TODAY’S DATE]

Re: [YOUR LOAN NUMBER]

To Whom It May Concern:

I hereby request information about the fees, costs, and escrow accounting of my loan. This letter is a qualified written request (QWR), pursuant to the Real Estate Settlement Procedures Act (RESPA).

The information I request as part of this QWR is as follows:

[Describe the issue or question you have and/or what action you believe the lender should take. Attach copies of any related written materials. Describe any conversations with customer service regarding the issue and to whom you spoke. Describe any previous steps you have taken or attempts to resolve the issue. List a day time telephone number in case a customer service representative wishes to contact you.]

[EXAMPLE REQUESTS – THIS IS NOT A COMPREHENSIVE LIST – CUSTOMIZE IT FOR YOUR SITUATION]

The current interest rate on this account.

The date your firm began servicing the loan.

The previous servicer of this loan.

A breakdown of the current escrow charges showing how it is calculated and the reasons for any increase within the last 24 months.

A statement indicating which covenants of the mortgage and/or note authorize each charge.

Please provide a copy of all trust agreements pertaining to this account.

If this account is registered with MERS, state its MIN number.

Please provide a copy of all manuals pertaining to the servicing of this account.

The total amount of principal paid on the account up to the date of this letter.

The payment dates, purposes of payment, and recipient of any and all foreclosure fees and costs that have been charged to my account.

Etc.

I hereby dispute all late fees, charges, inspection fees, property appraisal fees, forced placed insurance charges, legal fees, and corporate advances charged to this account.

Additionally, I believe my account is in error for the following reasons:

[LIST REASONS HERE.]

I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[YOUR SIGNATURE]
[YOUR NAME]

Again, the questions presented here are simply examples, as there are literally dozens of issues that may be disputed in a single case of mortgage servicing. A future article will look at many more issues and how they relate to foreclosure. They will also be requests that force the bank to prove it has been acting in accordance with the law and that it has the legal right and standing to pursue foreclosure against a home.

Homeowners often request that they be shown examples of letters they can send to their lender to fight foreclosure. The following is a template of a form letter than homeowners can send to their lenders to request that the original promissory note be made available for inspection. Whether the lender or servicing company will be able to comply with this request may mean the difference between defending a foreclosure lawsuit or losing the home.

[YOUR STREET ADDRESS]
[YOUR CITY, STATE ZIP CODE]

[YOUR LENDER]
[YOUR LENDER’S STREET ADDRESS]
[YOUR LENDER’S STREET ADDRESS 2]
[YOUR LENDER’S CITY, STATE ZIP CODE]

[TODAY’S DATE]

Re: [YOUR LOAN NUMBER]

To Whom It May Concern:

Please accept this letter as my formal request for a copy of my Promissory Note.

I am the owner of the real estate property located at [YOUR STREET ADDRESS, CITY, STATE ZIP CODE]. This property is security for a loan made by [ORIGINAL LENDER’S NAME], and was made on [DATE OF LOAN].

Within thirty (30) days of the date of this letter, please send me the Promissory Note for this loan for my own personal inspection.

If you have any questions or concerns relating to this matter, you may contact me via regular mail at the address listed above. Thank you for your prompt attention to this request.

Sincerely,

[YOUR SIGNATURE]
[YOUR NAME]

With all of the confusion of promissory notes and original mortgage paperwork that has been occurring in the mortgage industry over the past few years, this may be the exact request that lenders do not wish to receive from borrowers. Especially if there are other issues, such as an incomplete chain of title or conflicting land records, the servicer may be unable to prove it has legal possession of the documents.

If the company suing the borrowers for foreclosure can not show proof of possession of the original note, there may be difficult legal hurdles to clear for the lawsuit to go through. A lender or servicer that can not show it owns the note can not prove it has a dispute about a loan it can not prove it even has an interest in. Numerous cases so far have been thrown out of state and federal courts because lenders did not keep records of ownership.

Of course, simply sending such a request to the lender is no guarantee against losing the home. However, homeowners defending a foreclosure need to have as much information as possible, and as many different arguments as they can find as to why the lender should not be allowed to move ahead with sheriff sale and eviction. Sending a letter requesting the production of the promissory note is one more tool that can be utilized by homeowners.

Homeowners should keep in mind that the bank or mortgage servicer they are dealing with is 100% able to stop the foreclosure whenever they want. Especially if the borrowers are in a judicial foreclosure state, where it is required the bank begin a lawsuit to take the home back, if the lender/individual drops the case, the foreclosure will stop immediately.

Before doing anything at all, though, homeowners need to decide if the home is worth keeping. Many people today are fighting to save houses they can not afford in the long run. If borrowers are fighting for such a home, they are ultimately going to lose anyway. It may be better to cut their losses and move on. This is the same for those homeowners who are fighting to save a home that is worth less than the mortgage. Just negotiate a short sale or deed in lieu and move on with life.

If you have decided to keep your home, then keep reading.

Since you are dealing with an individual, you need to to come to an agreement with him or her that will allow you to repay the arrears and get caught up on your payments. If you were with a traditional lender, a loan modification would be your best option to save the home. But there are no rules/laws forcing anyone to grant you a modification.

Your very first option should be to try and come up with the amount you are behind. In many cases, you can raise this money with odd jobs, personal loans from relatives, and by selling unused items. I would start by getting donations from relatives, church, and social groups and having a garage sale to sell as much stuff as possible. Don't worry about your personal belongings, as you can replace them once you are back on your feet again.

You should also be cutting your expenses to a minimum. Get rid of cable TV and stop shopping for anything. Wear old clothes if necessary and eat the food in your house, rather than going out to eat or buying new stuff at the grocery store. Just keep the necessities that are required to keep your family healthy and don't do anything that would cost you your job.

During this time, you need to be negotiating with the mortgage holder to stop the foreclosure. You will need to negotiate a repayment plan that is more favorable than him taking the home away. Another good idea is to find out the current value of the home. There is a very good chance that you are currently paying more than the home is worth. If they realize this, it may be an incentive to keep you in the home. You ideally want to arrange a repayment plan that allows you to make your normal mortgage payment, along with extra to pay off the arrears.

If you can not afford this right now, you need to have a plan that will allow you to make these payments in the very near future. My guess is that you have had issues making payments on time in the past and this is why they are unwilling to help you now. I only say this because most lenders do not want to take a home away. It a huge expense and a lot of work for the average lender. They must have a good reason for wanting to take the home back. Regardless of the reason, you need to convince them that you will make all your future payments on time. Showing them proof of this, such as a second job, would help them believe you.

If you fail to raise the money and the lender is unwilling to cooperate, then you need to take a more drastic step. This will involve getting an attorney and using the threat of legal action to force them into a repayment plan. This action could also be used to buy enough time to raise the money needed to pay the arrears.

To start, you will need to gather as much information about the case as possible, such as the original loan docs and the appraisal. Some people hang on to these records or you may have to contact the broker and appraiser who worked on the case originally. No one is required to turn these documents over to you, so you'll have to be nice and use a little social engineering to get what you want. You will be trying to prove that you are a victim of predatory lending, so don't expect your current lender to hand over any evidence.

A “forensic loan audit” might be a good thing to pay for at this time. They cost about $250 and will reveal any problems when you originally got your loan. Once you are armed with this information, you can go to the lender and use the threat of a lawsuit as a negotiating tactic. Showing proof that you are, in fact, a victim should be enough for them to want to keep the case out of court.

If the lender still refuses to negotiate with you, your last hope would be to take the case to court. I would highly recommend hiring an attorney for this, but it is possible to do it on your own. Once you get this far in the process, you'll need more info to continue, so either ask for more help or get an attorney who specializes in lender fraud.

A number of homeowners exist in a kind of legal limbo between being renters and having a mortgage. They are not renting under a lease agreement, but they have not bought the property and obtained a mortgage. As well, they do not own the home they are living in outright. Instead, they have an agreement with the actual owner of the property under a land installment sales contract.

These contracts, also known as installment land contracts, land sale contracts, long-term land contracts, bonds for deed, or contracts for deed, are simply alternatives to a mortgage or deed of trust. The buyers take possession of the property and make monthly installment payments to the seller. These monthly payments consist of principal and interest, and at the end of the contract, the buyers will own the property outright.

While it sounds quite a bit like a standard mortgage, there are some important differences between a mortgage and a land installment contract. First, the seller is also the financier of the purchase, and the seller retains title to the property for as long as the contract is in place. It is only after the buyers have paid on the contract for the required period of time that they are granted full ownership rights.

The buyers, though, have more responsibility than with a rental agreement, and also more ownership rights. In the typical contract for deed, the buyer is viewed as the equitable owner of the property, is given full possession, and is required to maintain the house. The buyers, then, have rights to do anything to the property they want, as long as it does not interfere with the security interest of the seller.

Land installment contracts also usually allow sellers to avoid the standard foreclosure process if there is a default. Because the buyers do not have title to the home, the sellers may be able to use a process called forfeiture. This allows the seller to forfeit the contract, take back possession of the home, and retain all of the principal and interest payments made to date as rent or damages.

If a land installment sales contract is forfeited, the buyers may then be treated as tenants of the property. And if they are not paying as agreed on the contract, the seller will be able to bring an eviction action against them. However, as in almost all real estate related issues, the exact function and treatment of these types of contracts depend heavily on the state laws and how detailed the statute are in regards to them.

Some states have extremely detailed treatments of land sale contracts, regulating how they are to be terminated, forfeited, or foreclosed in the event of a default. Courts, as well, may require that all such agreements be terminated through the state foreclosure process, including the right of the buyers to defend any abusive actions in court and to have the property sold at a county sheriff sale.

Many states now require some notice to be given to the buyers of the default and impending legal proceedings, just as in the foreclosure of a mortgage. Buyers are also to be given a reasonable time to cure the default and have the contract reinstated. There are also redemption rights in some states which give former owners the ability to pay off the defaulted amount for land contracts that have been foreclosed.

Forfeiture of land installment sales contracts actually seems to be reducing in popularity. It is viewed as quite unfair for buyers to make payments on an agreement for a period of time and, upon default, to lose all rights to the property and not be given a full foreclosure process to defend their home. There is now even broad agreement that a contract for deed creates a mortgage on the property.

Although relatively few homeowners now use a contract for deed, it may become a more popular method of financing homes as credit stays tight for the average borrower. These agreements can be made between private individuals without the involvement of a larger bank or investment firm, and terms can often be more lenient than with a mortgage. Buyers and sellers should be aware of the drawbacks and benefits of such contracts.

In some cases of foreclosure, there may be enough instances of misconduct by the lender to show that the entire process constitutes a wrongful foreclosure. Many states even have common law regarding this issue, as well as a cause of action specifically for "wrongful foreclosure." Although the claim has not been popular in recent history, homeowners may be able to use this claim after losing their home.

When extreme circumstances affect the process of taking the home back, homeowners may have a better case to make for wrongful foreclosure. Instances of mortgage servicing abuse, for instance, have been used in the past as a complete defense to foreclosure. When notices are not given to borrowers or the servicing company refuses to negotiate for an alternative solution to foreclosure, there may be a defense to the entire action.

When homeowners are unable to get through to the lender to negotiate for a loan modification or other solution, claims of wrongful foreclosure may be raised. Many different types of mortgage contracts (FHA, for instance) require some sort of preforeclosure meetings or negotiation, and courts have held that foreclosure is such a harsh remedy that it should be relied upon as a last resort.

However, many banks are notoriously difficult to communicate with, often calling homeowners dozens of times a day, but with no real resolution to the problem even if the borrowers answer and want to negotiate. Collection calls rarely turn into productive discussions of alternatives to paying back all of the arrears at once, entering into an expensive repayment plan, or losing the home to foreclosure.

When borrowers are unable to get through to someone authorized to make a decision about their account, and the foreclosure process keeps moving through the courts, there may be a case for wrongful foreclosure. Homeowners may want to resolve the situation, but no good alternative is considered by the bank beyond lawsuits or the sale of the property at a county auction.

A wrongful foreclosure claim may also be raised in instances where the lender or servicing company has added excessive late fees, interest charges, home inspection fees, appraisal charges, improper escrow advances, forced placed insurance, and other charges. Lenders will add these fees in order to create a small default on a property with substantial amounts of equity, and then to eat up any remaining equity between the time of default and the sheriff sale.

Homeowners should be aware that there is relatively little recent case law on the claim of wrongful foreclosure; however, depending on the circumstances, it may be worth raising it as part of a defense to foreclosure. As always, state statutes and laws will affect how much this claim is worth pursuing, so it may be in the best interests of the borrowers to speak with a knowledgeable attorney.

As home values keep dropping yet property taxes keep increasing, tax foreclosure sales will become more common. Some homeowners experiencing double-digit percentage increases in their yearly tax burden, even as they are working fewer hours or taking pay cuts will inevitably come to realize that they can no longer afford to keep up with monthly housing costs that never go down.

Thus, tax sales will become more common throughout the country, especially in areas where the local government grew the most out of proportion to the surrounding community. The tax foreclosure and sale process, while similar to a regular foreclosure, also has a number of differences that make it both easier and more difficult to keep the house. Borrowers should be aware of how their local government can take their home.

Once a tax bill becomes due and is unpaid, it becomes a lien on the homeowner's property. Typically, the lien is imposed on the first day of the year after the property tax is assessed by the county. Under statutes in many states, tax liens are given priority status over any other lien, including first mortgages. In order to protect their first mortgage lien, lenders require that property tax be paid through an escrow account.

Sometimes it is the lender or servicing company itself that drives the property to a tax foreclosure sale. Whether due to incompetence or malice, tax payments are sometimes lost, applied to the wrong account, or simply held in the escrow account and never paid to the county. Other times, it is the county itself that misapplied the payment or received the tax but did not credit it to the homeowner's account.

This makes the entire process more complicated, as there may be several extra parties involved in a tax foreclosure than in a regular foreclosure due to the default of a mortgage contract. The borrowers pay into an escrow account administered by the servicing company. The servicing company holds onto these funds until the tax is due, at which time it forwards the money to pay the bill to the taxing authority. It is then the taxing authority's job to apply the payment. With all of the players involved, mistakes are inevitable.

Also, if a home is in foreclosure due to nonpayment of the mortgage, and there is an escrow account that is unpaid, the lender will most often pay the property taxes in order to prevent a lien from being placed on the house. But the amounts that the lender pays to keep the taxes up to date will most definitely be charged to the borrowers. They will be counted as part of the arrears if the homeowners with to cure the default.

Tax sales, which will be examined in a future article, also differ from the normal foreclosure process in that the bidder at auction usually only needs to pay the delinquent taxes to take over the property. Instead of paying close to the fair market value or bidding through a competitive auction, homes can be sold for as little as a few thousand dollars in unpaid taxes.

Buyers of tax foreclosures may also have to wait much longer to evict the former owners than if the house was foreclosed due to default on a mortgage. Local or state statutes may give homeowners up to a year to come up with the money to pay the taxes plus any costs and penalties and keep their home. The bidders will have to surrender their claim to the property and try again on another house.

Tax foreclosure issues will also usually be resolved outside of the court first. If the property owners want to dispute the assessment, how much they owe, or any payment amounts, they will most likely have to go through an administrative process, filing appeals or other paperwork with the county. The courts may be the final venue to decide any disputes, but homeowners may not be able to take their case into court right away. They have to go through the correct bureaucratic channels first, which makes defending the tax sale more difficult.

Tax sales, while not as prevalent as regular foreclosure auctions, may become a larger issue for homeowners as falling property values make it less worthwhile to keep paying on a home where local taxes keep increasing. In the end, counties may end up with nothing more than neighborhoods of abandoned homes generating no tax revenue at all and actually costing the community in terms of upkeep and further lowered property values.

Although the main focus of the foreclosure crisis has been on residential homes and, increasingly, on commercial property, there is a large segment of the market that is covered by manufactured homes. Close to eighteen million people live in manufactured homes. The target market for many of these properties are people with low income who are otherwise unable to afford a single family house.

When these homeowners default on the home, there are a number of differences between the process of foreclosure used on a residential property and the process used to take back a manufactured home. State law may affect the creditor's rights to a far greater extent, depending on what type of property the home is considered, where it is located, and what ownership rights the owners have on the land.

For instance, in many cases, individuals that own a manufactured home end up with two creditors if they borrow money to purchase the home. They will be paying the loan for the manufactured home, as well as on a lease or rental agreement for the land that is being used. Depending on if the owners default on the land agreement, or the home loan, different rights can apply.

Manufactured homes may be treated as personal property when they are purchased. Ownership is transferred through a certificate of title as if a car or other automobile was being sold. Creditors, in the case of a default, would be able to repossess the property, but would not have to go through a formal foreclosure procedure according to state foreclosure laws.

Other states, however, consider manufactured homes real property, and ownership is transferred through a deed recorded with the county recorder or clerk's office. If the homeowners default on their loan, the creditor would have to go through the foreclosure process according to the laws of the state, either by filing a lawsuit (judicial) or providing the property public notices (nonjudicial).

To complicate matters further, though, state laws treat manufactured homes very differently in some circumstances. Many state statutes allow for the conversion of a manufactured home from personal property to real property. And how the home is treated may be different in terms of the credit transaction. Manufactured homes, even if treated as personal property, are usually taxed in similar ways as real estate by local authorities.

Courts also play a role in determining whether property is real or personal when it comes to manufactured homes, especially if there is a question of foreclosure or repossession. This usually revolves around the issue of fixtures -- is the home so attached to the surrounding property that that it has to be considered a part of the real estate? If so, it will most likely be considered real property for the issue of default.

A big factor when it comes to the default on a loan of a manufactured home is whether it is treated as real property by any other type of state statute. For instance, if the home is sold under a certificate of title (personal property), but is taxed by the local government as real estate, courts will be more likely to consider it real property because of how it has been treated by other state actions. How the home was transferred in the past will be taken into account, but how it is currently treated may be more important.

The most important reason to determine if a manufactured home is real or personal is due to how the collection process will proceed in the event of default. The federal Uniform Commercial Code will generally be followed if it is treated as personal property, while state foreclosure laws will be used in the case of real estate. Homeowners may have an easier time defending the home depending on the applicable law.

Future articles will go into more depth as to the differences among states in how they treat manufactured homes, as well as how conversions are treated in different areas. Despite the large number of people living in these types of residences, the information on foreclosure or repossession of manufactured homes seems to be sorely lacking. But these homeowners need to be aware of the issues affecting their houses in the event they face a financial hardship and default.

From Washington Mutual to the local bank on the corner, the government has been busy since the financial crisis began shutting down banks almost every week. Many of these banks are becoming insolvent due to their exposure to the subprime mortgage market and other risky loans that they extended to consumers or invested in to take advantage of exorbitant profits. But with so many banks going out of business, homeowners with loans through these institutions need a plan for staying out of foreclosure.

Especially for homeowners facing foreclosure, when a bank is shut down by the government due to insolvency, the situation can become much more complicated. Typically, the assets of a failed bank are sold to another bank after the government has come in and run the bankrupt institution for a period of time. Loans are considered assets since they represent a potential stream of income. But foreclosed loans may be treated with a little less regard.

The big problem that homeowners in foreclosure will face is that they are already behind on their mortgage and it may be difficult to determine which company or agency to speak with regarding any loan modification, repayment plan, or short sale options. If the bank is out of business and not responding to calls, but has instructed its lawyers to move ahead with foreclosure, borrowers may find themselves in some sort of financial limbo.

The best response to this is for homeowners to begin keeping records of their attempts to stop foreclosure with the old lender, the government, or the new bank. They should keep documentation of their efforts to resolve the situation through the courts or outside the system. These records should note when they call, write, or send faxes to the bank and what information they are attempting to obtain, or what solution they are trying to negotiate with the bank.

If the bank is in bankruptcy right now, there is a good chance the homeowners' loan will be sold to a new bank in a period of time. That bank will only see that the borrowers are behind on monthly payments and in foreclosure. In some cases, they may send a letter or two offering assistance, but may just move directly ahead with foreclosure, taking up where the insolvent lender left off.

In this type of situation, the borrower's plan should be to save up as much money as possible during the period the bank is in receivership with the government. If they are able to, they should put away at least the amount of their normal monthly payment and put it in a separate bank account. These extra funds can be used to show a good faith effort to pay back the arrears or as a bargaining chip for a mortgage modification or other plan.

Once the new bank contacts the borrowers, whether it is to pursue foreclosure or not, they should start negotiating with the lender, using the documentation and money in the bank as bargaining chips. If the new bank does not work with the owners, then they should take the matter into court and show a judge how they have been saving up their money to pay down the mortgage and attempting to work out a plan but had never gotten a response.

Foreclosure is supposed to be used as a last resort, so if the bank is not responding to homeowners, they need to show that they have tried to fix the situation outside of the court. Even in situations where one bank goes out of business, is taken over by the federal government, and is then sold to another institution, homeowners can make a good case for stopping foreclosure just by saving up money and keep documentation of their efforts to negotiate with their lender.

Often, when homeowners need a specific piece of information from their lender, the bank is suddenly unwilling to communicate. Despite numerous faxes or phone calls, the information never seems to make it from the homeowners to the bank back to the owners. There are some options and tactics that borrowers can use to get this information, however, before taking legal action.

First, the best idea may just be to call back the lender and keep trying. In many cases, it is usually best to make another phone call and talk with a new company representative until the owners find someone more cooperative.

Another method that foreclosure victims can use is to contact the court that handled the case and find out if what they are looking for is part of the public record of the case. For specific property documents, the county court may have records. For specific pieces of information about the mortgage company itself, other government regulatory agencies may have disclosures and other public documents.

Finally, homeowners can try to talk to the person who signed the applicable paperwork originally. In the case of many documents that are provided at closing or during the loan application process, the main signer on the loan may have kept a copy or could get a copy from the mortgage broker or closing agent.

Lenders and servicers have never been easy to work with. The representatives they hire for loss mitigation are severely overworked, undertrained, and underpaid. The representatives have to deal with angry customers all day long and they all stopped caring about any one homeowner a long time ago. This is why borrowers who are serious about making a case to keep their homes need to be persistent.

When dealing with lenders, homeowners and their advocates or family member helpers need to make sure they have authorization to discuss the loan account. They can make sure of this in two ways: the first is to fax is signature authorization from the main account holder to the lender; the second is to have have the main account holder call the lender and give them verbal authorization to speak with someone else. Most lenders will allow a 24 hour verbal authorization to speak with a third party.

Once a third party is actually authorized to speak with a lender, the homeowners and advocate need to leave their emotions completely out of the situation. They have to assume that the people working for the lender are not sympathetic and have already heard hundreds of sob stories each week. In fact, they should assume that the bank will mock them and make fun as soon as they are off the phone, if the conversation becomes too emotional. I personally experienced this with a client when the representative thought we had already hung up.

Another important mistake many people make is demanding the results they want. Homeowners have to remember that they are at the bank's mercy in some cases; they do not have to help, and they most likely will not if borrowers become too demanding. By acting politely and professionally, the owners will likely get what they are asking for.

When a lender does turns homeowners down, they might try asking if there are other solutions to avoid foreclosure. For example, instead of demanding or threatening litigation when the bank rejects a loan modification application, the owners could ask if they have any advice on how you could obtain the solution or paperwork that is being sought. Most people will be inclined to find a way to help, assuming the borrowers ask in a professional manner.

Another question you need to ask in this scenario is what their reason is for withholding some documentation or solution from the owners. It may be a simple matter of obtaining the correct authorization, it may be something that particular office does not have access to, or it may have a more sinister reason behind it. Either way, asking the right questions should help homeowners get to the bottom of their problems with getting documents from banks and servicing companies.

When homeowners or their legal advocates are doing research on a loan, there are numerous documents that may help inform their case against a lender. These can include mortgage documents, information available in the public record, and other information obtained through fighting a lawsuit in the courts. Thus, borrowers should be aware of these different types of documents and how they can help in defending a home.

The original mortgage documents are the most important in defending against a bank's foreclosure attempt. If there are any mistakes or fraudulent aspects discovered in these, the entire loan may be invalidated or a court-ordered loan modification plan may be put into place. Signs of abusive lending or clauses that may provide remedies to foreclosure should be searched for by the borrowers.

There are five documents that homeowners may wish to consider the most important when they are searching for the original paperwork. These are the following:

• HUD-1 Settlement Statement
• Truth in Lending disclosure and Rescission Notice
• Note for the loan
• Deed of Trust or Mortgage
• Appraisal

If a mortgage servicing company is involved in the collection of the payments on a monthly basis and responsible for the foreclosure process, homeowners should begin collecting documents related to the servicing. Servicer abuse is rampant, as the entire industry was set up from the beginning to prey upon homeowners and reward corrupt or fraudulent companies for pushing people into foreclosure.

There are several documents that homeowners should attempt to obtain from servicers and compare with their own copies of documents and calculations.

• Payoff Statement
• Complete payment history
• Contact history and notes on the account
• Disclosure of current owner of underlying loan
• Servicing transfer notice(s)
• Pooling and Servicing Agreement (PSA)

After obtaining the documents from the original lending transaction and relevant information from the servicing company, homeowners should begin to look into public records. The bank, its attorneys, and any potential bidders will examine public records to find out as much as possible about the owners and the property. Borrowers should do the same to research the lender, servicer, and owner of the loan.

Searching public records can present endless sources of information for homeowners in researching mortgage companies. Just a few ideas are listed here:

• Land records from the county recorder
• Securities and Exchange Commission documents
• Complaints against companies with regulatory agencies
• Record of company through Better Business Bureau and other advocacy groups
• Records of other lawsuits the bank has been involved in
• General internet searches
• Corporate documents and accounting statements

Before going into court, these documents can help homeowners begin to build a decent case for why a foreclosure should not allowed to go through. There are also numerous other documents that can be obtained in the discovery process in court, which will be covered in a later article. The types of documents and the purposes for each in the defense of the home present vast potential for homeowners trying to stop foreclosure.

Just like lenders examine borrowers' records to decide if they will qualify for a loan, homeowners should go through the exact same process to determine if a bank has a legitimate right to foreclose or not. In many cases, they may discover enough irregularities in the loan to force the bank into a mortgage modification or, if that is not offered or appropriate, have the entire foreclosure process thrown out of court.

Many investors have made a lot of money over the last 3 years with bank foreclosures. But they've either taken on a substantial amount of risk or they've worked very hard to make their money. As always, there are a few who got lucky and were in the right place at the right time, but in general, foreclosure investing is either a big risk or a lot of work.

When it comes to investing in foreclosure real estate, in todays market, it's necessary for someone to take a loss in order for the investor to make a profit. In most cases, it's the previous home owner who ends up losing. Some investors think they are doing the homeowner a favor when buying their home, but the fact is, unless they are paying near the market value, it's unfair to the homeowner. This is such a problem in some states that they've adapted laws against investors buying a home in foreclosure and reselling it for a profit.

Many real estate investors have also lost their fortunes by getting into the market at the wrong time. Very successful individuals, developers, and corporations have all lost millions due to buying foreclosure properties that continue to decrease in value. With the economy in the shape it's in today and the government printing and giving away money that it will never have, it's just a matter of time until there is a complete financial meltdown. Expecting a property value to increase is just not a good bet anymore.

For example, an investor I know in Cleveland found several homes that (at one time) appraised for $80,000 to $120,000 and because of the market and foreclosure rates for the neighborhoods, these homes could be purchased for around 50% of the appraised value. In past years, this would be an investors dream deal, so he purchased about 20 of these homes. Less than one year later, the value of every single home is less than $20,000 and he has lost nearly one million dollars because of this transaction. I hear stories like this, and worse, every single day.

In my opinion, investing in foreclosure real estate has become too risky of an investment. With the foreclosure laws changing on such a regular basis and all the fraud and misconduct going on, making a profit with a foreclosure property is not only very hard, but it can actually be illegal under the right circumstances! I would rather stick to a safer bet, one that doesn't involve the risk of going to jail.

Many people are also getting into loan modification or forensic loan research businesses. If you are looking to start a business and you can obtain the proper licensing for your state, you may succeed. But the government is making it harder and harder to operate this type of business. The fact is, they don't want consumers to use for profit companies. They only want homeowners to get help through government programs or directly through the lenders. This way they have more control over the deals and interest rates that are agreed to. This helps them control their own profits and losses. Getting into this type of business at this point in time will likely end in failure because of government regulations and the many established businesses who already do a better job than you likely could.

A better option would be to invest in a business that is already successful at helping clients out of foreclosure. A business that has already obtained the proper licensing and has withstood the many hardships of our industry. These businesses can be wildly successful and many of them would welcome new investors. At ForeclosureFish, our main business is finding clients for other loan modification or short sale companies and we know that many of them are actively seeking investors.

We have a similar program with our network of established modification companies that allows investors to get involved without as much risk and without any physical work. Investors can participate in a marketing program that generates clients for these companies. In exchange for funding the marketing, they share in the profits obtained from their contribution. This type of investing is more secure in todays market, because fluctuating real estate values can actually help the investment. Although government laws and regulation can still effect the returns. This type of investing may not return the windfall returns that some (successful) foreclosure real estate investors see, but a steady 20%-40% return can be a nice addition to any portfolio. This type of scenario also allows investors to start on a small scale and grow with the business, which also mitigates a lot of the risk.

If you have been thinking about getting into the foreclosure real estate market, or other ways to invest in the foreclosure industry, then make sure you do your home work and talk to other investors before jumping in. As with any investment, doing a little research up front will pay off huge in the long run.

One of the most stressful periods in any homeowner's life is the few days and weeks leading up to the closing of the real estate sale and the funding of the mortgage. The hectic nature of this process makes it far more likely for borrowers to feel rushed and stressed out and makes it much easier for banks, mortgage brokers, real estate agents, and title companies to overlook certain aspects that will later harm the borrowers.

In fact, many homeowners have reported that the terms of their mortgage changed between the time they were quoted their loan and when the closing was finally done. While some differences will be reasonable due to changing conditions, borrowers have been given adjustable rates instead of fixed, sold homes that did not pass inspection but were not told until too late, or had to bring more money to close than they originally thought.

Whether these are honest mistakes or simply methods that the bank, lawyer, or brokers use to increase their fees and commissions at the last second is debatable. But closings are usually rescheduled a number of times. By the time the closing is really scheduled, everyone seems rushed and homeowners are told to sign dozens of pages of contracts, notices, and disclosures.

Also, almost everyone else is present at the closing except the mortgage broker. The Realtor, lawyer, and closing agent will be present, but the most important person, the one who sold the owners the mortgage, is usually not there. This means that if the terms had been changed without the borrowers' knowing about it, or mistaken documents were sent, it is likely no one would catch it or care even if they did.

The one person who might be able to answer any questions is the title agent, who receives all of the paperwork and instructions for the closing directly from the mortgage company. But closing agents have been held liable for statements they make about the loan, so most have stopped making any statements about them at all. They instruct the borrowers to sign and attempt to appear as busy as possible until the closing is done.

And after all, the title company that usually handles the closing does not get the instructions from the lender until the day before or the day of the closing itself. Despite laws stating that the final settlement statement should be available for the borrowers' inspection at least 24 hours before closing, this does not always happen in real life. Again, everyone is rushed and the owners will not even know how much money to bring to close.

The entire process makes it so much easier for slight changes to be made to the terms of the real estate transaction or mortgage without the new owners being aware. And from the shared experiences of many borrowers, it seems that this was too often the case. In all the of the rush of trying to get the loan closed, new owners did not even notice the changes and were certainly never given the time to read all of the documents that are now being used against them to take their homes.

Homeowners who are facing foreclosure often have to make some very difficult decisions about their current financial situations, how to deal with the mortgage, and future economic prospects. Unfortunately, though, too few borrowers ask themselves the tough, important questions that would provide them with the best chances of long term financial success. A foreclosure situation can be a good time to reflect on these issues.

The first concern homeowners should have when researching how foreclosure works and various solutions is why they are seeking this advice and knowledge in the first place. Is it because they are looking for options to save the home? Or maybe just to sell or give up the property and walk away? Are the borrowers concerned about a deficiency judgment if they walk away or do they even know if this would be allowed in their state?

For homeowners who are already working with their lender or a foreclosure assistance company, they may just want more information about the process of modifying a loan or otherwise negotiating with a bank. Learning how to stop a sheriff sale on short notice is also useful, depending on the circumstances. But until homeowners know why they need foreclosure advice, it is difficult to find the specific information that would help them most.

Another primary issue worth reflecting on is if the homeowners want to sell or save the home, and what their options are in either case. Furthermore, while they may want to save their home, if they are unable to work out an affordable method of doing so, it may be better to sell. But if the market has declined, selling may also be a difficult option, which may force homeowners to file bankruptcy or give the bank a deed in lieu.

Also, homeowners should take some time to consider why they fell behind in their mortgage in the first place. If it was due to a short term hardship that they did not prepare for, it may be wiser to establish an emergency fund to make sure the situation is unlikely to happen again. Rather than clutching at any desperate attempt to stop foreclosure, it may be better to give up the home and rebuild their financial lives.

On the other hand, if the borrowers did have a savings plan and just ran out of funds due to a longer term economic change, it may be necessary to give up the home unless there is enough income to pay the mortgage and get back on a savings plan. But having a home without savings is just an invitation for the next emergency to turn into another devastating financial hardship.

A final consideration may be for homeowners to determine what the chances really are of dealing with all of their debts. If it is not possible to settle with unsecured creditors, filing Chapter 7 bankruptcy may be the best solution, whereas a Chapter 13 may be in order if the borrowers want to use federal court protection to pay back their debts to the greatest extent possible.

While there are many, many issues to think about when facing foreclosure, too many homeowners just jump into an expensive loan modification or repayment plan, go straight for bankruptcy, or simply abandon their homes. This often results in borrowers taking out more loans or extending themselves even further financially, with no better result than delaying the loss of the home by a few months. This is an unfortunate resolution to foreclosure and can be avoided with some thought and planning.

It would seem that the media and court judges were the last two groups to realize that lawyers pursuing foreclosure against homeowners on behalf of insolvent banks routinely lie in order to push lawsuits through the court system. Homeowners attempting to work out alternatives to foreclosure have known for years through direct experience that it can be extremely difficult to deal with a law firm when attempting to save a home.

But the reasons that lawyers engage so widely in this practice are not clear, even though close to 75% of mortgage foreclosure lawsuits inspected have errors or abuses. Beyond simple greed and laziness, though, there is usually more incentive to proceed with a fraudulent or mistaken foreclosure, rather than take the time to make sure the paperwork is in order, the bank has a real case, and it is clearly laid out to the court.

One of the first reasons for so many banks and lawyers initiating lawsuits with poor quality has been the dramatic rise in the foreclosure rate, which has taken vast extra resources to address. But servicing companies and banks have simply do not have the extra money, time, and staff to dedicate towards solid loss mitigation efforts.

The most that lenders have done is to shorten the time that is taken in beginning collection efforts and the foreclosure process. Years ago, banks would wait close to 45 days after a payment had been missed to begin calling borrowers. Today, collections departments will begin calling within 15 days of a missed payment. As well, homeowners used to be able to expect around 10 calls a month -- today it is closer to one every day or more often.

The law firms that are hired to pursue these foreclosures in court have also been caught unprepared for the rise in delinquency rates. Although no one in America is under the impression that we need any more lawyers, the rising foreclosure rate has caused existing foreclosure and collections attorneys to become careless about the quality of the documents filed in court.

Even worse for the lenders and lawyers is that many owners of loans will actually penalize law firms that take too long with the foreclosure process. A flat fee may be paid to the attorneys for an expected amount of work, and any delays or extra work required will not be paid. This makes it more likely that the lawyers will try and file anything, even if it is based on lies or mistakes, rather than take a pay cut.

The government-sponsored enterprises have these types of policies that offer a set fee to law firms for foreclosure actions and will not pay over and above that amount. They also stipulate that the foreclosure process must take no longer than a certain amount of time. Any work or time that is required of the lawyers after this will not be paid. This gives an even stronger incentive to proceed with poor quality lawsuits.

Furthermore, if homeowners are surprised at the lack of communication skills banks and servicing companies have when dealing with borrowers, they should be aware that banks exhibit this same inability with the law firms they hire to file lawsuits.

Often, homeowners may be trying to work out a solution to foreclosure, such as a short sale or mortgage modification, but the lawyers will go ahead with the foreclosure process anyway. In fact, the borrowers may be told by the bank that the process is on hold, while the law firm is never instructed to delay pushing the property towards a sheriff sale and eviction. This is a common communication breakdown.

A final problem is that the legal process may begin even before the lender or servicer is technically allowed to begin loss mitigation talks with the borrowers. Often, the file will be sent to the attorneys to begin preparing lawsuit documents within a couple of months after default, but the lender is not authorized to offer a modification until three months of payments have been missed.

All of these circumstances combine to give law firms hired by servicing companies more financial incentive to file fraudulent lawsuits against borrowers. The fact that these attorneys know that local courts are swamped with foreclosure cases and homeowners rarely show up for hearings are additional incentives -- their frauds or mistakes are unlikely to be discovered or pointed out by defendants.

With the economic depression, government takeover of the banking and auto industries, and a failure to fix the foreclosure rate in America, homeowners are becoming increasingly desperate for options to save their homes. And unfortunately, the most common options to keep a house and get it out of foreclosure are quickly becoming difficult to impossible to achieve.

This is why homeowners should work on the conventional alternatives to foreclosure, such as mortgage modification, foreclosure refinancing, and selling the home, but should also have a few backup plans ready to go "just in case." A few of these last resorts include filing bankruptcy, selling at a short sale, and offering the bank a deed in lieu of foreclosure, and each of these options have both benefits and drawbacks.

Bankruptcy has a number of good aspects to it that homeowners can utilize in a foreclosure action. Filing can stop a sheriff sale immediately, even if it is just a few hours before the auction time. Bankruptcy will also put a stop to collection activities (including any foreclosure lawsuit) once the automatic stay goes into effect. As well, just by filing, homeowners will delay foreclosure and get more time to work out other solutions.

Unfortunately, though, there are serious drawbacks to option that should encourage homeowners to consult a personal bankruptcy lawyer to determine if it is right for them. Bankruptcy will destroy a borrower's credit. And if the payment plan under the Chapter 13 is too expensive, it may prove to be only a short term solution. Lenders will try to get the case dismissed at every opportunity, making it an ongoing fight for homeowners.

Selling the property at a short sale is another option to stop foreclosure and unload a property. Homeowners can sell and the legal process will be stopped completely. Even with a declining real estate market, they will be able to sell for less than total owed on the mortgage. Also, by negotiating the terms of the short sale with the lender, borrowers can avoid any possibility of a deficiency judgment.

On the negative side, though, short sales can be problematic. There are possible income tax ramifications (although these have been lessened). The biggest sticking point is just that lenders may not approve a short sale even if it is in their best interests to do so, and it takes time to get the deal completed even if the mortgage company is willing to allow homeowners to use a short sale to avoid losing their house to foreclosure.

Offering the bank a deed in lieu of foreclosure can be a last resort if the owners are unable to sell or refinance or work out any other solution. This alternative avoids the house being sold at a public foreclosure auction, as well. And similar to a short sale, borrowers would be able to negotiate away any potential liability for deficiency judgments. A deed in lieu can cut short the foreclosure process, as well, if the lender accepts it soon enough.

The main drawback of a deed in lieu of foreclosure is simply that the lender still has to approve it before it can go through. And mortgage companies are not often willing to accept one unless it is clearly in their interests, which may be rare. Furthermore, the impact of a deed in lieu can be almost as damaging to homeowners' credit scores as having a full foreclosure and numerous missed mortgage payments.

The main objective for most homeowners facing foreclosure is just to save their home and get back on track with their financial lives, if possible. If not, selling and walking away with a little bit of money is a good second choice. But life does not always work out the way we want, so it is always a good idea for borrowers to have at least one backup plan if they are unable to work out a more beneficial solution to foreclosure.

When homeowners first begin to experience trouble paying their mortgage, in order to avoid foreclosure, they typically turn to one of three common options. These three alternatives that can save a home include refinancing through a foreclosure or hard money lender, requesting help from the government programs, and asking the mortgage company to negotiate a loan modification.

With any plan to save a home from foreclosure, there will be both positive and negative aspects of the solution. Whether any of these options will actually help a family for the long term or just prolong the inevitable is always dependent on the unique circumstances of each financial hardship. However, homeowners can know where to focus their efforts by learning more about each solution.

Foreclosure refinancing through a traditional lender or hard money lender can be accomplished fairly quickly. If the conditions are right, a loan to stop foreclosure can be approved within a matter of days, and all of the due diligence (income verification, appraisal, and so on) can be accomplished within weeks. Hard money lenders can act even more quickly than traditional banks and foreclosure lenders.

However, it can be very difficult for the average homeowner to qualify for a foreclosure loan in the first place. This is due to strict income and equity requirements, and homes that have dramatically declined in value from peak levels may not have enough equity. In order to move ahead with the refinance, the homeowners would have to negotiate with their lender for a reduced payoff or bring cash to closing.

With all of the new government plans in place, many homeowners may attempt to cash in on the subsidies. There has been a vast amount of money made available for government-guaranteed loans to foreclosure victims, as well as programs providing assistance in working with the government to negotiate a loan modification. In some instances, these programs may be beneficial for borrowers.

Unfortunately, though, many of the government programs have been plagued by failure, high redefault rates, and wasted money. The $320 billion program to help one borrower is just the most egregious example of this. The new plans are also primarily voluntary for the banks to participate in, and the vast majority of lenders have been choosing foreclosure over assisting homeowners through the government programs.

Loan modification has also been discussed more and more by politicians, the news media, and foreclosure assistance companies, and for good reason. A mortgage modification can help lower the monthly payment, put the defaulted amount on the end of the loan, or reduce the interest rate on a loan. Homeowners who can qualify for a good modification are often in a much better position to keep paying their mortgage for the long term.

The problem, though, is that most lenders offer a much more expensive repayment plan instead of a loan modification. With a repayment plan, the interest rate remains the same and borrowers have to make their regular payment plus a portion of what they are behind. This can quickly lead straight back to foreclosure. Even through the government modification programs, many banks only approve repayment plans instead.

While these three alternatives discussed here are currently the most popular, homeowners need to be aware of the benefits and drawbacks of all of the solutions to foreclosure. In most cases, losing the home can be avoided if the borrowers know where to focus their efforts, rather than wasting time on popular, but inappropriate ways to stop foreclosure. Foreclosure is a matter where time is of the essence -- there is no good reason to waste it pursuing bad alternatives.

With all of the different parties involved in a real estate transaction, it can be surprisingly easy for serious mistakes to be made in the mortgage or note documents. Banks can be held responsible for these mistakes, even if they are not discovered until after foreclosure has begun. But if a mortgage or note has serious material defects, homeowners may be able to have their entire loan declared void when defending the foreclosure lawsuit.

The mortgage or note may be defective in any number of ways, from minor deficiencies to major ones that can derail a foreclosure lawsuit entirely. Homeowners may want to take a look at the original mortgage or note that they signed to obtain their loan and compare it to the version that was recorded and the version that the mortgage company currently holds. Any discrepancies may be valuable sources of information and may lead to the uncovering of mistakes. In any event, such differences may be questioned by borrowers.

For instance, terms may not match between one version and another, or terms in riders attached in additional sheets may not match the terms found in the mortgage or note itself. Stated terms may also be impossible to perform, such as if the loan states the rate will adjust in three years but the adjustment date listed is actually only one year from the time the contract was executed. When the loan closed and what terms are contained in the paperwork will hold clues to potential deficiencies.

Even if a loan is modified once and homeowners fall behind again, there may be a defect found in the paperwork. If all of the required parties did not sign the modification agreement, the new mortgage may be defective. Notary stamps that are expired or incorrect also indicate defective paperwork. Homeowners should read the loan documents carefully to find these discrepancies if they wish to include them as defenses in a foreclosure lawsuit.

Invalid terms in a mortgage or note, however, will have different recoveries for borrowers. Minor defects that caused the owners no harm may just be modified by the courts or simply ignored as immaterial. Major, material defects, on the other hand, could result in the entire loan being declared void. Of course, a likely consequence for many homeowners in court may be somewhere in the middle of these two extremes.

Homeowners should also view defects in the paperwork as potential violations of other federal and state lending laws. If the terms are stated incorrectly in the mortgage or note, the calculations based on the defective terms may violate the Truth in Lending Act or other regulations. In such cases, borrowers may sue for damages under these laws or include counter claims in their answer to the lawsuit.

Some common defects that homeowners may run across are listed below:

Terms in the mortgage and note do not match.

Terms in the riders do not match the mortgage or note.

The terms are impossible to perform.

Errors create liability under the Truth in Lending Act.

Errors in the interest rate trigger HOEPA regulations.

Assignments of the mortgage or note are not valid or properly endorsed?

Assignments were not signed at all.

The loan is not properly amortized according to the terms of the mortgage or note.

The mortgage or note recorded with the county do not match the versions included by the bank in the complaint.

A mortgage modification agreement is not signed by all parties to the loan transaction.

The lender that approved the modification is not the foreclosing lender and there is no chain of title to indicate the new lender owns the mortgage or not.

The notary stamp is defective or expired.

The mortgage lien was released accidentally.

Of course, possibly the best way for homeowners to determine if their loan has any of these deficiencies is to consult with a foreclosure attorney. Either by hiring a lawyer to help them with their court case or just consulting with one to find out the best options going forward, good legal advice should be sought out by foreclosure victims. Speaking with an attorney is not a guarantee to stop foreclosure, but it can help homeowners gain some perspective on how to defend the lawsuit and what to do to save their home for the long term.

While many homeowners who read this article would ideally want to save their home from foreclosure, this may not always be the best solution to a financial problem. But too often, the emotional attachment that owners have to a property is strong enough that they would like to keep the house, even if the plan they use to save it is not reasonable for the long term.

Most borrowers should utilize various options to stop foreclosure, but even before deciding on a plan of action, they should decide whether the house is worth saving or not. Depending on the answer to that question, their plans to deal with the property and the foreclosing lender will be drastically different.

The first consideration that homeowners should have is for the equity in the property. If there is a large amount of equity, it may be worth finding a solution to foreclosure and holding onto the property. Of course, with property values in decline in many parts of the country, many fewer owners have any equity at all than did just a few years ago.

Secondly, homeowners facing foreclosure should decide if there are any other economic reasons to keep the house besides just the equity in the property. For instance, if there is a second mortgage that may sue after a foreclosure sale, then it may make more sense to negotiate with both lenders to find a way to get the loans back on track.

A third consideration in deciding whether to keep or give up a house due to foreclosure is the emotional value the home has for the owners. A brand new home built a few years ago will have different sentimental value than the property one of the owners grew up in. If the house does have this type of emotional content, then it may be important for the owners to try to save, regardless of the amount of equity.

A further consideration should be whether the owners believe they will be able to make reasonable mortgage payments over the long term. A temporary financial setback can be overcome and the creditors negotiated with. A longer term financial change, however, may make it impossible to save the home, and other solutions should be pursued in such cases.

Finally, homeowners facing foreclosure should attempt to work with their bank even if it is just for more time to sell or move out. But their negotiations with the lender over small issues will help them determine how easy it would be to deal with the bank for more substantive changes to the loan. If the bank is unwilling to work with borrowers, it may not make sense to pursue many options to avoid foreclosure.

Borrowers should decide whether their home is worth keeping even before they begin negotiate with their lender for solutions to foreclosure. What they negotiate for, whether more time to sell, a short sale, or a mortgage modification, will all depend on whether or not the home is even worth saving in the first place.

One problem that many homeowners who are attempting to stop foreclosure on their own face is that their bank just does not seem willing to work with them. The lender, in many cases, relies on an all or nothing approach to foreclosure: either the borrowers pay back everything they owe as quickly as possible, or they lose the house to sheriff sale and eviction.

Unfortunately, many borrowers attempt to negotiate with the bank for some other solution, such as a mortgage modification or short sale, but the bank is simply unwilling to consider reasonable offers. Modification agreements turn into impossible repayment plans, and lenders just turn down short sales without consideration for the offer.

It is in these types of situations that homeowners may wish to turn to other sources of information to find alternatives to losing a house to foreclosure. While some sources may be expensive, they can often be used to convince a bank to negotiate or at least delay the foreclosure process for several additional months while another solution is worked out.

The most expensive but potentially the most useful source of information about foreclosure is for homeowners to speak with a real estate attorney who is versed in lending laws. These attorneys can often point out mistakes the bank has made in originating or servicing the loan, or in pursuing foreclosure in the first place.

While the up front expense to gain the services of a good real estate attorney may be high, the benefits can be enormous. For a few thousand dollars at the most, borrowers may be able to delay foreclosure in court for years or find enough deficiencies in the mortgage to make it in the best interests of the bank to negotiate a reasonable loan modification.

Various foreclosure consultants specializing in helping people save their homes can also offer much-needed assistance to homeowners. While a small number have been exposed as scams, the vast majority of consultants work hard for homeowners and provide loads of information to make sure they are receiving the best advice possible.

In fact, it is in the interests of any foreclosure consultant to make homeowners as comfortable as possible with the process of saving the home and how foreclosure works in the borrower's state. Only by understanding foreclosure can homeowners really work together with a consultant and their bank to stop foreclosure for the long term.

Borrowers who have some time and are willing to put in some additional work can also find useful information from law libraries. These are located throughout states and contain documents with explanations of various lending and real estate law that may apply to a homeowner's case against a bank.

Especially if they are planning on attempting to defend foreclosure in court on their own, a trip to a law library may be in order for borrowers. While actual legal research is beyond the scope of this article, there are numerous books that can teach ordinary people how to find and research various legal issues.

Finally, just searching online for foreclosure information is often the easiest way to begin to understand how the process works in a particular state and with a particular lender. Not only are theories and explanations of law to be found on numerous websites, there are also thousands of real-life stories from families that have faced foreclosure.

If nothing else, searching for foreclosure advice on the internet is a good start and can help homeowners begin to plan what step they should take next, whether it be calling the bank to negotiate, listing the house for sale, or filing bankruptcy. In any case, borrowers can learn far more online for almost zero expense.

Knowing where to turn for good advice is one of the main problems of dealing with foreclosure. Government programs, foreclosure consulting firms, real estate brokers, bankruptcy attorneys, and everyone else has an opinion on how best to save a home. However, every foreclosure situation is unique and homeowners owe it to themselves to research their own case as much as possible.

One of the problems that homeowners may run into when defending a home against foreclosure is finding out what company really owns their loan. The original lender may sell the loan but keep collecting payments, or a mortgage servicer may be hired to do this. But finding the actual owner of the loan is important in negotiating a solution to foreclosure.

In fact, mortgage servicing companies have little incentive to negotiate with borrowers, as they actually make more money by jacking up foreclosure-related fees, as opposed to a mortgage modification or other agreement. This makes is essential for homeowners to find out just who owns the note at the time they begin missing payments.

There are a number of ways to do this, the first being a simple call to the current company collecting payments to ask who owns the original note. Sometimes the original lender will sell the mortgage after originating it, while retaining the right to collect the payments and act as the servicer. But even in this case, the servicer has a greater incentive to foreclose.

A second easy method to determine which company is the actual lender in the transaction is for borrowers to search their monthly bill and payment information for any other company's name. If a second company is listed on the monthly bill besides the company the homeowners make their payment out to, this may be the actual owner of the loan.

Another way to find out if the loan has been transferred and to what company is to call a local title company and request a search. A routine title and lien search can cost about $100 or less, depending on the title agency and the work involved (not to be confused with purchasing title insurance, which can be much more expensive).

Homeowners can also perform a title search on their own by contacting their county recorder's office. Many counties have this information online now, which makes searching for transfer documents much easier than in the past. However, borrowers should call to make sure there are no further documents that have been filed but are not in the online system yet.

The main problem with these types of title searches, of course, is that the paper trail may run cold. Many banks sold loans amongst each other but never recorded an assignment with the county recorder, which would make it much more difficult for a lender to prove that it actually has a right to foreclose on a particular property.

But homeowners who find it almost impossible to determine which company actually owns their loan may want to bring this issue up if the bank claiming to be the lender files a foreclosure. Numerous lawsuits have been thrown out of court because a mortgage company could not prove that it owned the loan.

Borrowers will find it very difficult to defend against a foreclosure action if it is not clear which institution has the right to collect on the loan. If there is no document recorded on the property indicating an assignment to the foreclosing bank, what prevents another company from showing up later on and insisting it really owns the loan?

Many homeowners seem to personalize a collection call from a lender, fearing that admitting they can not pay the loan will damage their self-esteem beyond repair. Unfortunately, talking to the bank is the first, most important step in working out a solution or finding a way of avoiding foreclosure altogether. Homeowners, though, can make these calls far more productive.

It is essential for borrowers who are serious about saving their homes to document every time the lender calls, where they call (home, work, cell phone), who leaves the message (or if it an automated message), and what the message was about. Also, owners should either take the call if they can, or return it as soon they are able.

However, homeowners do not have to speak with the collection agent and give out all of their personal information and deal with the typical amount of belligerence and intimidation. Asking for a manager from the bank's collection department, it should be noted, will usually result in 15% more belligerence and 25% more threats of foreclosure, with 10% less work actually done on the file.

The best way to deal with the collection or loss mitigation employees may be for the borrowers to acknowledge they are having difficulty paying their loan, request the fax number for the department, and make sure to send any letters or correspondence to them. But listening to threats of foreclosure all day from a collector will not solve the problem of foreclosure.

Instead of dealing with low-level collectors, homeowners can begin attempts to get in touch with someone with actual decision-making abilities, such as the bank CEO, branch manager, senior loan officer, or the legal department of the bank. At the bare minimum, any correspondence sent to the bank should also be forwarded to these other departments and senior managers.

Whenever the collections department calls, homeowners should take or return the call, but politely hang up the phone without getting into too much discussion. But as soon as they do have a problem paying the mortgage, borrowers should call the main office of the bank and request some very specific information.

With larger banks, it may be difficult to know who to talk to or ask for, but homeowners can ask for a manager from the regular customer service division or someone who can help with legal matters (foreclosure is a legal matter). With smaller banks, it may be easier to call the main branch, ask for the name and extension number of the manager or senior loan officer, and get off the phone after receiving this information.

Then, the homeowners can wait a while and call back and ask for the manager or loan officer by his or her name. This will put them in contact with a higher level employee who is more able to make decisions about a loan and work out more flexible arrangements than a collection department employee (or even a collections manager).

Again, it should be noted that any documents or correspondence sent to senior management at the bank should also be copied to the bank president, the collections department, any lawyers office involved with the foreclosure, and anyone else applicable. Homeowners should also keep track of how often they call the bank and are called by the bank, including if they leave voicemails for the manager.

Too many homeowners waste valuable time when they do not call the lender or return its calls; too many more waste extra time dealing with low-level collectors. This may be one reason to consult a foreclosure attorney to handle the foreclosure, since it would be easier to get in touch with the legal department, but borrowers can contact a senior manager at a bank on their own and reach an agreement to stop foreclosure much quicker.

Related
Avoid the Collection Calls, Contact the Bank Manager... Now What?

It should be no secret by now that most mortgage lenders are hopelessly disorganized. Many of them routinely lose faxes or never receive letters that are sent to them by borrowers, and they are terrible at acknowledging voicemails or returning phone calls from homeowners attempting to work out an alternative to foreclosure. Some even lose entire loan documents.

This puts the organized homeowner at an advantage when attempting to defend a home. Just having copies of loan documents and having kept track of all correspondence between them and the lender will help borrowers keep on top of the foreclosure. In the event the situation goes before a judge, homeowners will be able to prove their attempts to save the home.

There are a number of documents that homeowners should keep track of, including any specific loan workout packages that they are sent by the mortgage company itself. These documents include real estate and mortgage paperwork, escrow documents, copies of other liens attached to the property, a record of communications, any letters sent by or to the lender, payment statements, and foreclosure notices.

Homeowners need to have a copy of all of the real estate contracts and mortgage or deed of trust paperwork that were used in the original purchase or any subsequent refinance of the property. There may be grounds to dismiss a foreclosure if any of these documents indicated an invalid loan or show potential predatory lending. Copies of this paperwork is given to homeowners at the closing of the loan, but can also be obtained through the county clerk or recorder's office.

Escrow documents will be especially important if the bank or mortgage servicer is claiming that the homeowners did not adequately fund the escrow account and were charged extra fees. Homeowners can contact the original title company to obtain copies, although they should have received copies when the loan closed, as well.

Any other liens on the property and any other document filed with the county affecting the property should also be retained by the borrowers. This may include other mortgages, tax liens, or court judgments. Many counties have copies of these documents available online now, and the originals can be examined at the county recorder's office.

Homeowners should also keep track of every phone call they receive from the lender, as well as when they make calls to the bank. If they do not record the actual conversations, they should at least document when the call was made, to whom the homeowners spoke, what was discussed, and if any agreements were made or follow-up required.

In addition, after every phone call in which the homeowners speak with someone live, they should send a follow-up letter or fax to confirm what was said and create a longer paper trail. Borrowers should also respond in writing to every letter that the mortgage company sends them, even if just to show that they have attempted to work out a solution to foreclosure in as many ways as possible. Sending a letter via fax is alright, as long as the owners can prove the fax went through -- claiming not to have received faxes is a favorite tactic of mortgage servicers participating in fraud.

All mortgage statements or monthly bills should also be retained by the homeowners -- just ignoring them and throwing them away unopened is a bad idea! These documents can prove if a lender overcharges for late fees or interest or adds any other outrageous fees on the account. All payment information should also be kept, including any partial payments sent to the lender or payments made online or over the phone.

Finally, once the foreclosure begins, homeowners should keep track of all the legal documents that are sent to them by the lender, its attorneys, or delivered by the county itself. When attempting to stop foreclosure through the courts, there are specific time lines for filing responses, which will depend on when the homeowners received copies of the paperwork.

As an aside, homeowners attempting to save their home should absolutely keep the envelopes that contain the lender's communications. Lenders can be notorious for sending out a notice or important letter a few days (or weeks) later than they should, thereby giving the borrowers even less time to respond or work out a solution. This is a favorite tactic of fraudulent companies -- sending out documents late, giving little time for response, or not even sending the documents out a all but claiming to have done so.

This may seem like a lot of information the homeowners have to keep track of, but putting in just this little extra amount of work can pay huge dividends when it comes to defending a home in court. Banks do not have a right to a property -- they have a right to have their loan satisfied. If they make it difficult-to-impossible for homeowners to satisfy the loan or work out an alternative to foreclosure, there may be serious lender misconduct going on, and legal defenses may have a better chance of success.

"You never want a serious crisis to go to waste." - Rahm Emanuel
"Never waste a good crisis." - Hilary Clinton
"With crisis - and certainly foreclosure is a crisis -- comes the possibility for change." -- David M. Petrovich, author of Fight Foreclosure!

With so many homeowners currently facing foreclosure and the economy in the grips of a far greater recession than most could have predicted, there are many new opportunities. And these are not just opportunities for rich investors to grab up distressed properties are fire-sale prices or for corporations to get free taxpayer money.

No, far more opportunities are available for individual families and communities across the nation than has been acknowledged thus far. Facing foreclosure during the boom years made it easier to sell the property quickly, but far more difficult to find an affordable rental property and an understanding landlord.

But now, home values have declined by large amounts across the country and many more properties are just sitting vacant on the market, looking for buyers or renters. This makes finding a new place to rent after losing a home much easier, and some landlords are facing foreclosure themselves and just looking for good tenants to help provide cash flow.

The banks are also beginning to find out that extraordinary foreclosure rates are a good opportunity to renegotiate mortgage loans. The more properties pile up on bank balance sheets, the lower their value and the more the banks have to pay just to keep up on maintenance and property taxes.

Although the financial giants are primarily looking for direct bailouts from the citizens of the country via the federal government, more lenders have been modifying loans in recent months and even Citigroup is supporting bankruptcy judges being able to reduce balances on loans on primary residences, a policy which it opposed just months ago when it was solvent.

The federal government is wasting no time or looted resources to take advantage of the financial crisis, and homeowners should be no different (although take care not to loot -- the government claims a monopoly on this). The banks are weaker and they know that foreclosure is becoming a more risky option.

Homeowners can capitalize on this knowledge by aggressively negotiating with banks or hiring a lawyer to do it. Loan modifications, short sales, and deed in lieu of foreclosure opportunities are becoming more available, as lenders with huge mortgage exposures know that solving more foreclosures means the difference between survival and failure.

It is almost automatic. The second you are late paying your mortgage, the lender begins to call, looking for its money. At first, the collector may be nice and gently remind you of the due date and that you missed your payment for that month. But soon enough, the calls start coming almost every hour, both at home and at work. When you are facing a financial hardship, how do you tell the mortgage company that you can not pay them?

Many homeowners are quite put off by the collection department of a mortgage lender. The callers seem rude and uncaring, only demanding money, asking when the borrowers can pay, and intimidating them with threats of foreclosure or eviction.

The collectors for many lenders, however, are nothing to be afraid of. In fact, they are more like trained monkeys or programmed machines than real human beings. Collection department representatives are typically paid a percentage of any past due money that they intimidate homeowners into sending in. Their success at this job is posted throughout the department, turning the collection of mortgage payments into a game.

It is no wonder, then, that in such an anxiety-creating job environment, collectors are usually unable to react like normal, compassionate people attempting to help homeowners solve a problem. Instead, they take their own anxiety and force it onto the borrowers in their attempts to collect just one more payment before the inevitable foreclosure starts.

But it is this negativity and intimidation factor that causes many homeowners to avoid the calls from the mortgage company. Instead, they turn to other companies to contact the lender for them, which may be an even worse experience if they fall for a foreclosure scam.

Thus, borrowers the loss of a home must somehow get over their fears of contacting the mortgage company, if they wish to begin the process of working out any solution to foreclosure. The following tips for dealing with collection departments may help homeowners put together an outline of how they want the conversation to do, as well as controlling the tone of their interactions with the bank.

First, homeowners should understand that feeling an enormous amount of anxiety before calling the lender is completely understandable and natural. It is a combination of fear of the unknown, fear of failure, fear of being humiliated, and many other feelings that will coalesce around that one phone call. But it is usually only the first call that is the hardest.

Second, once borrowers actually get through to someone (after potentially more than an hour on hold and several disconnects), it can be important to take a moment to gather their thoughts and relax. In his book, Fight Foreclosure, David M. Petrovich suggests the following when beginning a conversation with the lender: "Take time to recovery. Tell the collector you need a moment, and ask if it would be okay to put the phone down for a minute to get your file." After relaxing for a second, get back on the phone.

A third tip is for homeowners to introduce themselves first as they expect the lender to address them for the duration of the interaction. For example, saying, "Hello, this is Mr. Smith, and I am having a problem with my mortgage. What is your name? Would you be able to help me?" will let the collector know that the borrowers wish to be addressed as "Mr. Smith," rather than just by their first name. This keeps the interaction on a more business-like level.

While this introduction begins to set the tone of the interaction, homeowners should also focus on keeping the conversation polite, focused on solutions and how to achieve them, and a basic understanding of the facts of the matter. Crying on the phone or shouting at the collector will not persuade the collection department to turn the file over to loss mitigation or otherwise work out a solution.

Another good idea is for homeowners to be prepared to give information to the lender, but also have a list of questions for the bank when they call. The bank will ask about the financial hardship and basic financial data, and then request a package of documents. Homeowners, on the other hand, can ask who owns the loan, who services the mortgage, what type of loan they have (ARM, Option-ARM, fixed rate, and so on), the current interest rate, and if the loan has private mortgage insurance (PMI).

Asking these questions will give the borrowers their own agenda for calling, as opposed to calling just to fall into line with the lender's agenda. Even if some of the questions the owners ask are somewhat irrelevant, or they already know the answers, just asking puts the borrowers in control of the interaction, even for a short while. This can markedly decreases their anxiety.

Furthermore, asking questions will allow the homeowners to get a feel for how difficult it may be to get answers from the bank later on. If the bank can not state who owns the loan, a big red flag should go up in the borrowers' minds. This may indicate that the bank would be unable to produce the original mortgage note, if requested -- important information if the loan goes to a foreclosure lawsuit.

Finally, homeowners should either tape record or document every conversation they have with the lender. Both parties already know (usually from an automatic voice telling them so) that the conversation with the bank will be recorded -- homeowners might as well keep their own copies. These can be extremely important if the case goes to court and the owners need to request a judge's help in negotiating a loan modification or other repayment plan.

Homeowners trying to stop foreclosure on a property should understand that their anxiety about speaking with the lender is an irrational fear. Although the fear will only go away once they call the bank, the benefits they get from avoiding calling are far outweighed by the risks of not talking to the mortgage company. Having an agenda, controlling the interaction from the beginning, and keeping the conversation business-like should give borrowers an advantage, though, in working out some agreement to avoid the foreclosure.

When homeowners first lose a job, suffer a medical emergency, or otherwise have their finances turned upside down, the first reaction always seems to be hoping that problems go away and things turn out for the best. Unfortunately, too many people have found out the hard way that this rarely happens, and a financial hardship can last far longer than expected.

But homeowners seem to have an infinite amount of optimism (or anxiety ) that they will be able to turn their situation around and get back on top of all the bills that are piling up on their kitchen tables. A payment is missed but it is within the grace period; a call to the auto insurance company allows the borrowers to pay a few days late with no penalty; student loans can be deferred.

Soon, however, the situation spirals out of control, with more payments being sent in late and some not being sent in at all. The mortgage, of course, is the first priority but also the most expensive of the bills, and falling behind on that one will result in the most severe negative consequences to the homeowners. Inevitably, though, the mortgage also falls behind.

It is usually around this point that the collection letters and phone calls begin to arrive, with bankers and collectors telling borrowers what they already know. Their account is behind, bad things will happen if they do not pay, they would wish to avoid that, right? All they have to do is send in a payment and everything will get better.

The homeowners usually promise to make a payment even when they know that it will be late or nonexistent. After all, it is easier to make the promise and get the phone calls to stop for a day or two than it is to admit their financial failures. But when the payment is never sent it, the phone calls start again, combined with the letters and then certified mail and foreclosure lawsuit paperwork served by a sheriff.

This is an all too common story for many homeowners who end up being unable to save their homes after they have missed too many payments. The main problem is that they wait so long for a solution to fall out of the sky that they miss every opportunity to work out other arrangements with their lenders.

If you are facing the loss of a job, cutbacks in hours, a temporary layoff, or have suffered another type of financial hardship, the time to act is now -- not after you have already begun to fall behind in your payments. The sooner you can inform the bank that you are going to be late paying the mortgage (or credit cards, car loans, and everything else), the more options they can offer you to stay out of collections.

Regardless of any new foreclosure bill the government comes up with to help modify loans or bail out homeowners, there are already a large number of solutions to foreclosure. But the most effective, like foreclosure refinancing or mortgage modification, for instance, almost require that the borrowers address the problem before it gets out of hand.

The consequences of waiting too long to save the house do not just include a more expensive plan. They include losing the home completely, witnessing foreclosure costs, attorney fees, and interest eat away the equity of the home, and having to move out before you are ready just to avoid being evicted. Most or all of these can be avoided simply by acting sooner.

So take action today if you are facing a significant change in your monthly finances. The banks will waste no time in beginning to pursue your debts. Find out your rights, research foreclosure advice, and put together a plan to stop the collection processes before they begin. Dealing with a small problem now will mean that you do not have do deal with a much larger, possibly insolvable, one later on.

What is your background and your company's experience in foreclosures?
My background is in the real estate, mortgage, securities, insurance, and financial planning industries. I have held licenses with state real estate regulators, insurance regulators, and mortgage banking divisions. I have also been licensed through the federal government in securities. All my licenses have been in good standing, with never a complaint, warning, or other negative mark. My education background is in the same areas.

All of the employees of our company have similar backgrounds, and we work with attorneys who specialize in real estate, contract, bankruptcy, and other areas of the law that would relate to foreclosures (licensing law, lending law, etc.).

How can you stop a sheriff sale?
There are several ways to stop a sheriff sale. The easiest is to call the bank and request a postponement because you are working on another solution. Put your request in writing, ask the bank for a fax number, and send the request. It is deceptively simple, but banks will most often just delay the sale for an extra 30 days.

Or, you can fight the foreclosure in court. If there is already a judgment for the foreclosure, you might want to hire an attorney to get the case reopened in the county courts. If you are in a nonjudicial state, you can just file a lawsuit against the bank for a temporary restraining order until there is a hearing to determine if the bank's case for foreclosure is unwarranted. Then you can get a preliminary injunction, which will stop the sale until the courts rule on the case.

Third, filing bankruptcy immediately stops any foreclosure proceedings. The automatic stay in a bankruptcy prohibits banks from collection activities, and a sheriff sale is a collection activity. You can file just a few hours before the auction, and the foreclosure sale will have to be called off or reversed. Bankruptcy puts the matter into federal court, and the bank can not use the local courts to take your house.

If a borrower defaults on a loan modification, does the bank have to start the foreclosure process all over again?
If the bank modified a loan in 2007, and you fall behind in payments again now, the bank should have to begin foreclosure proceedings all over again. Unless there was some order from the court simply putting the process on "hold," all of the requirements will have to be met again. What the bank has to do to foreclose depends on state law, but they can not just schedule a sheriff sale date if the borrowers fall behind for a month or two on a modification.

Often, I get questions sent to me by the readers of this blog, and my usual habit is to fire off an email and answer the questions. But over time, I am beginning to realize that some of the same questions are being asked, which leads me to believe that, if one person takes the time to write an email and ask, other homeowners may be wondering about the same things.

So, in a new feature here, I will be posting the answers to questions I am emailed on this blog. Of course, if borrowers send information about their specific situations, that will be kept confidential. But if you have any question about the content of this blog or any of the individual posts, please do not hesitate to send an email, and I will do my best to get back to you as quickly as possible. Also, if you have any ideas for future posts, send them and I will put up a blog for you.

Are you a lawyer?
I am not a lawyer myself, but many of our blog posts come from either the attorneys on staff or other legal sources. Much of our time here is spent researching legal issues about foreclosure and credit, and take pride in our series on introducing homeowners on how to defend themselves against foreclosure -- a work heavily inspired by legal sources and lawyers. We also work with or have affiliations with several different types of attorneys (real estate, contract, bankruptcy, and so on).

Are you affiliated with The Debt Advocacy Center?
Our website is affiliated with the Debt Advocacy Center, which you can read more about on our site or by visiting their site directly. In a nutshell, they will research your mortgage and loan transactions to determine which lending laws the bank, mortgage broker, title company, or other parties have violated. Instead of fighting you in court for years, the bank will be more willing to offer you a mortgage modification.

Do you help people on an individual basis?
We do help people on an individual basis. If you have general questions, you can search our blog or website, or just email them to us and we will track down the answers and get back to you. For specific questions, you may want to call the Debt Advocacy Center directly, as they can help you with your particular situation. Every foreclosure situation is unique, with different chains of ownership of the note and various procedures followed by all of the parties involved in a mortgage transaction.

Many Americans blame themselves for missing mortgage payments and falling into foreclosure. But not surprisingly, in many cases, it is the lender who may have forced you into this situation from the beginning! If you are facing foreclosure and you feel you've been taken advantage of by your lender, or if they were unwilling to offer help to stop the foreclosure, then you need to find help immediately.

When you first received the loan for your home, your lender was required to provide that loan in accordance with the Truth in Lending Act and fair lending guidelines set up by HUD. If your lender did not follow these guidelines, then the loan they are trying to foreclose on may not even be valid. In these cases, your lender could be forced to write the loan as a new loan, as if it was never written in the first place and you never missed a single payment.

Imagine how much different your life would be if you could change your loan to a new low fixed interest rate and completely forget about all the missed payments. This may sound too good to be true, but here are just a few ways that may help you qualify for this type of program.

1. Inflated appraisals. It is no secret that lenders have used their own appraisers for mortgages and have chosen these appraisers by picking the one who gives them the most favorable appraisals. If an appraiser, chosen by your lender, provided an inflated appraisal to help get you approved for your mortgage, then you have a very strong case against your lender. When an inflated appraisal is given, this allows you to get a loan higher than the value of your home. This happened a lot in the past when borrowers didn't have much money to put down, or to lower monthly payments by eliminating PMI (Private Mortgage Insurance).
2. Stated Income Loans. If your broker knew you couldn't afford your monthly payment and instructed you to provide documents (possibly false or forged) for a "stated" loan, they acted illegally. This also happened quite often in the past. Here is the scenario: You want to buy a new home, but your monthly income does not qualify you for the monthly payment. You told your broker your income and provided docs, but they could not get it approved as a "full doc" loan. At this point, they will either tell you they need you to "state" that your income is higher than it actually is, or even worse, they will do it for you. In some cases, the brokers have even lied for you and provided false documents to "state" a higher income.
3. You thought you were getting a fixed rate, but later you found out it was adjustable. This happens more often than you could ever imagine. Sometimes the borrower notices at closing, but more often, they closer skims over that section and the borrower never even notices. This is a classic bait and switch scam. They promise a lower monthly payment than they can actually deliver, so they just switch to a lower interest, adjustable rate loan to match the quoted payment. This is highly illegal and you should not lose your home if you are a victim of this type of fraud.
4. Your interest rate was different at closing, than what was shown to you on the Truth In Lending statement. When you signed your loan documents, they should have shown you a Truth In Lending statement, which tells you your interest rate, total loan amount, and the term of the loan. This should be exactly the same at closing. If it is not, then you should not have gone through with the loan. But even if you did, it is not too late to get satisfaction.
5. Your broker faked a lease agreement or asked you for fake canceled checks. This type of fraud happens, because your broker is trying to do a refinance loan, rather than a purchase loan for you. Because lenders sometimes allow a leased homes, or land contracts to qualify for a refinance, this can eliminate the need for a down payment or PMI insurance. This happens a lot when friends or family members sell a home to each other. If your lender asked you to state something, or provide documentation that wasn't 100% accurate or true, then it was fraud. Even though you may have though this was for your own benefit, it was illegal advice from your broker.

   There are many other forms of fraud that your lender may be guilty of, so if your lender is refusing to help you stop foreclosure, or if there are other situations that make you suspect your lender of fraud, then you may be able to keep your home, with a new lower interest rate!

   If one of these five scenarios seems familiar, or if you think you have been taken advantage of in another way by your lender, then you need to find help immediately. Many companies and organizations, both private and public, have been helping victims of such fraud for decades now, so do not think that it is too late, or that there is not help available. No matter what your situation is, you should seek the help of a professional to help you get satisfaction on your mortgage.

When lenders begin to foreclose on a mortgage in default, there are typically a number of notices requirements that they must meet for the process to be legal. Otherwise, the homeowners may be able to contest the foreclosure in court for inadequacy of process, and the bank's lawsuit or ability to sell the house may be thrown out and it will have to restart at the beginning.

In most states, homeowners are required to be notified of many aspects of the legal process of foreclosure. Usually this is accomplished by posting the applicable notice on the property itself, which a sheriff's deputy will do. Certified mail may also be used for some documents, such as the complaint and summons or copies of other court documents.

However, banks foreclosing on a property are also required to post legal notices elsewhere, in case the borrowers are no longer living in the home and to notify any other interested parties of the legal action. State foreclosure laws may state that notices of default or sale must be listed in local newspapers for a period of weeks or even posted right on the door or a bulletin board in the county courthouse.

The first notice most homeowners will receive is the notice of default. This will come from the lender and indicate how long the owners have to reinstate their mortgage before the home will be sold. If the borrowers are able to pay back the amounts listed on the notice of default, they will be able to stop foreclosure from going forward and keep their home. But this is the first official notice they will receive that the home is in danger.

The bank will also have to record this notice of default with the county clerk or recorder's office. This will make the foreclosure proceedings a matter of public record and alert any other parties thinking of buying the house or refinancing the loan that payments on the mortgage or deed of trust are currently in default.

In states that require a lawsuit to bring a foreclosure (also known as judicial foreclosure states), banks may be required to inform homeowners that foreclosure proceedings may be brought into court soon. This usually gives borrowers a few week's notice if they wish to try and negotiate a mortgage modification or other other arrangement with the bank before the lawsuit is filed.

Homeowners, if they are unable to reinstate the loan by the end of the period on the notice of default, will then be sent a notice of sale of the property. This indicates when and where the house will be sold by the county at an auction to satisfy the delinquent mortgage. In most cases, the sheriff sale will be conducted at the county courthouse and there will be few other bidders besides the bank itself.

This information is also usually listed in local newspapers for a number of weeks. The exact number of times a sale is listed depends entirely on the state foreclosure law. Too often, this has been the first indication homeowners receive that they are in foreclosure at all, if they have not been opening mail from the bank or ignoring certified mail and other documents sent to them by the lender.

If the state has a redemption period after the sheriff sale has been conducted, homeowners will receive another notice informing them of their right to redeem and how long they have to do so. Some states have no redemption period, while others have from just a few months to a year for borrowers to attempt to save their home.

Banks must follow all of these notice requirements for the foreclosure process to be valid and legal. If it or the attorneys miss one or another notice, the homeowners may be able to contest the foreclosure for inadequacy of process and have the lawsuit thrown out or the sale halted. This would then require the mortgage company to begin the entire process all over again from the beginning.

Foreclosure seems to be a straight-forward enough procedure. Homeowners take out a loan and then fail to pay, so the bank gets the house. But it is treated as a breach of contract case in the courts. If the homeowners have an agreement to pay a mortgage company a certain amount of money every month to decrease the amount of a loan, and then fail to uphold their end of the agreement by defaulting on the payments, the foreclosure is the legal remedy the bank has to take the home to pay off the debt.

But this breach of contract issue works in both ways. Lenders also have to uphold their end of the mortgage contract and can not have a home sold at sheriff sale if they are also in breach of the contract or have violated lending laws. There are so many state and federal laws to follow that it is quite conceivable that both the bank and homeowners have voided the contract by failing to follow it as agreed. In fact, it may be the bank that violates it first but the owners have no real incentive to sue the bank until they are being sued for foreclosure themselves.

However, only the bank quickly goes into court to try and have the contract enforced, which makes it look like mortgage companies are the victims of deadbeat borrowers. After all, homeowners do not watch the mortgage contract like hawks and sue the lender at the first sign of a violation or breach of the contract. Maybe they should. But lenders are rarely taken advantage of by borrowers, as just as many banks fail to meet their requirements under the contract and applicable laws as homeowners fall behind due to hardships or other reasons.

If homeowners have failed to keep up their end of the mortgage agreement and banks have met all of their requirements, then foreclosure should be allowed to proceed. It liquidates the bad debt off the balance sheet of the banks and allows them to recoup some of their losses by selling the home either through a sheriff sale or on the open market later on. Unfortunately, this may be a rare case, since banks do not even provide any consideration to make the mortgage contract valid in the first place.

But if the bank has also failed to keep up its end of the bargain, then homeowners should defend the foreclosure in court or with the assistance of regulatory agencies at the federal and state levels and attempt to stop foreclosure. If the lender fails to follow the law and the loan agreement, then the homeowners have no further obligation to pay anyway -- the contract has already been breached by the bank and foreclosure is not an option if the owners later default on the payments.

No one person or foreclosure assistance company, including this site, can give you absolute assurance of honesty or their success rate. I can say that the Debt Advocacy Center is made up of attorneys who are under an ethical code that would make us liable for mistruths. We do not represent you as attorneys, but we are still bound by the attorneys' Canons of Ethics.

I hope you have learned a lot that can help you from these special posts this week, and, if nothing else, know that we are extremely competent and knowledgeable.

Our passion is to help those facing foreclosure to deal with their situations, either themselves or with the help of professionals. It is our opinion that homeowners in trouble should consider trying to negotiate with their lender themselves before paying any company to obtain a loan modification, deed in lieu or short sale.

The key is (i) not to wait until too late if your own efforts are not successful and (ii) not to accept a servicer's offer just to reinstate the mortgage and spread arrears, when you could not pay the basic mortgage payment in the first place.

Usually what they offer is not what can be negotiated. Remember that they are not going to just reduce your payments to be helpful. They will go only as far as they feel they need to. Good negotiating is an art and you can either learn it from our educational program or have us do it for you.

Remember, once you accept a modification or forbearance plan, the holder will never renegotiate it. So do not make the mistake of taking what they first offer.

How to handle a foreclosure

There are, basically, five parts to obtaining a desired result.

Part 1 is to put together all of your loan documents and prepare certain forms necessary to deal with loan servicers.

Part 2 is to put together the facts of the origination of your loan to show the servicer and holder that you can legally contest the foreclosure and that foreclosure will be very expensive in comparison to a modification, deed in lieu or short sale.

Part 3 is to slow down the actual foreclosure process, to allow time to negotiate.

Part 4 is to put together a plan that will fit the holders' underwriting guidelines.

Part 5 is to break through the servicer's lower level personnel to a decision-maker and then negotiate.

If, at any point in this process, you find that you might not be successful, we are available to assist you with further educational materials and/or negotiation services that have achieved over a 90 percent success rate to date.

Lenders have done improper things during the origination of loans. These things can give most people defenses to foreclosures that make them much more expensive.

As most people have heard, it is much cheaper for the holder of the mortgage to modify it then to foreclose. It will usually lose 40% to 50% on a foreclosure and far less on a modification. SO WHAT IS WRONG? WHY DO FORECLOSURES KEEP HAPPENING AND MODIFICATIONS DO NOT? The answer is in the process that occurs after you take out your mortgage.

These loans were sold in enormous "mortgage backed securities" to "holders" which employ " trustees" for the administration of the loans These holders are what are called "holders in due course" who are legally immune to many claims that the consumer may have had against the original lender. They use this as a "shield" against defenses and counterclaims that homeowners may have against them.

But many of the things that occurred are bad enough that the defenses go through to that holder. And at the Debt Advocacy Center out attorneys have put together which ones those are and how attorneys can use them.

Besides thinking that they are safe from lawsuits, they also think that trustees will do the right thing and modify loans where it makes sense.

But, trustees do not lose money on a foreclosure as they are paid their fees anyway. The holders lose the money but there are too many of them that own any mortgage backed security that they are not really capable of changing the trustee's behavior.

So, many trustees do not care much about foreclosures unless they are the holders too.

Further, the trustee hires "servicers' to do the day-to-day administration of the loans. As they also have no monetary "skin in the game" they do not care either. Who does suffer? The people and institutions that have bought the securities and the homeowner. None of the real injured holders have any realistic say in what is going on; and homeowners can not get at the trustees or holders to negotiate!!

That is why nobody the consumer calls at the servicer is willing to help, except to offer a reinstatement of the loan and repayment of the "arrearage in payments" over time.

Sometimes servicers are told by the trustee to modify loans, but only if the borrower can afford a deal within strict guidelines that most homeowners simply cannot afford.

There is another problem that stops mortgage modifications. The servicers are paid a fixed amount to administer the loan. If they simply push the foreclosure to an attorney, it costs them far less than actually spending money on personnel to negotiate modifications.

So, why negotiate? It actually costs the servicers more! Finally, servicers have hired legions of low paid personnel to handle these foreclosures. Some are even located in places like Sri Lanka and India, who have no knowledge or authority to modify a loan.

Someone does care, however. Those are the senior executives and General Counsel of the Servicers and Trustees who may be held accountable to holders for not modifying loans. They know that legally, they are under a duty to "mitigate" (lessen) the losses on a foreclosure to the true holders of the loan as well as to the homeowners!! When senior attorneys enter the picture, servicers negotiate and trustees force them to do so.

At the DAC we have used our attorneys to show these massive irregularities to senior executives at most of the largest servicers and holders. In turn, they give us our own team of loan modification experts who do not deal with the public.

Because of this we can, in most instances, obtain very significant loan modifications, short sales and deeds in lieu of foreclosure.

Every day we read about the "foreclosure crisis" and how the real estate market crash was responsible for it. NOT TRUE. The truth is that most mortgages that are in foreclosure today, were made by lenders who knew that the borrowers would be unable to pay unless they refinanced. And they should have known that great markets don't last forever and people would not be able to refinance.

How does an adjustable rate starting at two percent and going to ten percent in two years sound?? Do you think anyone could afford that jump??

The terms were unconscionable; not just ethically, but legally. As was predictable by every lender, when prices started dropping and the credit scores of these consumers did not improve, refinancing was not possible and foreclosures resulted.

And now, we are all left holding the bag.

That is only the beginning. Almost every loan for the last 14 years was made with an improperly done appraisal. Appraisals, under a law called FIRREA are supposed to be totally independent, but Realtors, mortgage brokers and lenders made sure that appraisers were pressured into inflating appraisals. That pressure violates any number of laws and regulations and can be used to the borrower's advantage.

Many loan documents did not properly compute the APR on the loan, which is another improper practice.

Loan terms were unexplained and were never properly explained or disclosed. Actual fraud was not unheard of and consumers were the victims, although lenders claimed it was them.

But, there are ways that the lenders' conduct and its impact on the cost of foreclosures, can be used to negotiate affordable modifications, deeds in lieu of foreclosure, and short sales.

With the foreclosure rate ever increasing, the market has been flooded with programs to save a home. There are so many foreclosure assistance solutions from private companies and government programs available to homeowners it can become overwhelming. Knowing where to start getting help and understanding your options can be the hardest step of all.

If you started missing payments on your house and find yourself falling further behind, it is time to start looking for help. When looking for foreclosure assistance, you want to make sure you choose the right solution for you personal needs. There are two main aspects that you need to keep in mind when looking for professional help to solve a foreclosure.

First, make sure you are not getting involved in some sort of foreclosure assistance scam. There are an astoundingly large number of people that will take advantage of others in their time of need. Research any companies you plan on getting involved with and make sure they are legitimate that that you trust them to do what they promise. If there is any question in your mind, you should either do more research before getting involved with one company or another, or simply move on to someone else.

Second, look for every possible option that will save your home, although it may not always be possible. There are plenty of assistance programs out there, but look to one that has as its first priority allowing you to keep the home after the process is complete. Some “foreclosure assistance” programs are only looking to buy cheap houses or otherwise allow you to dispose of them in an easier manner than sheriff sale and eviction.

Now you know the two main concepts to keep in mind when looking for solutions to save your house. You are ready to read over these seven ideas for options either to stop the foreclosure, keep the home, or dispose of it with the least damage to your credit and personal financial situation.

1. The first thing you should always do is talk to you mortgage lender; this is the number one action you can take. This way, you can find out where you stand and what options are available through your current lender. Be honest with your bank, but keep in mind your priority of saving your home, and see what solutions they can come up with. The sooner you go to them, the more likely they can help you, especially if you have not missed too many payments.

2. Refinancing your loan is always a good idea if you have not waited too long. If your adjustable rate mortgage has increased drastically, replacing it through another bank should be your first consideration. Lowering your interest rate will save you a lot of money and will most likely help you avoid foreclosure for the long term. Refinancing is usually only available when you have missed less than three payments, have some equity in your home, and still have a decent credit history.

3. Ask your lender about entering into a forbearance agreement on your loan. Forbearance can help reduce your mortgage payments or even delay them for a time period without any legal action. This is a great option for someone that has had a job loss or extreme financial problems, as it gives you more time to come up with the money to get back on track. The best way to qualify for this solution is to clearly explain your situation to your lender and ask for a special forbearance.

4. Selling your home may be a good option for you if you are still in the pre-foreclosure stages. This is best used when you have not gotten a actual foreclosure filing yet. Obviously it takes time to sell your home, so the quicker you get it on the market, the better. Selling the property is a sure way to avoid foreclosure, although it does not let you keep the house.

5. Some companies will offer you a special repayment plan. This means your lender will allow you to repay your past due amount by adding part of it to your monthly payment each month until you have paid back all of the arrears. This is a good solution if you just fell behind on your bills due to temporary money loss and can keep up with the new higher payments. However, if you will be unable to afford a higher payment or even your regular monthly payment, this option is not a long term solution to foreclosure.

6. You can also find other companies that will do a short sale on your home. A short sale will let you sell your home for less than the mortgage amount, with your lender's approval. This would be more of a last resort, after you have explored your other options. Also, keep in mind that you may incur income tax obligations on a short sale, unless you are technically insolvent and the home's value is lower than the sales price.

7. Using a deed in lieu of foreclosure is a final option you can explore, where you convey all interest in your property to the lender to satisfy your debt and avoid the legal process of foreclosure. A deed in lieu can still harm your credit, so be careful and find professional help before choosing this option. As well, lenders may be somewhat reluctant to accept this type of offer, so make sure that you also have more solutions available.

The most important point to keep in mind is that you need to make sure you explore all possible foreclosure options before it is too late. Help is available from multiple sources and through various methods, so there is probably a good way for you to fulfill your goals with the property. Whether it is stopping foreclosure for as long as possible, keeping the home for the long term, or disposing of the house more efficiently, you just need to take advantage of the time and resources you have available while they are still available.

Most people, even those in foreclosure, don't understand the foreclosure process and how it effects their exact situation. There are many steps in the process and each state and county can handle foreclosure differently from the next. Because of this, it can be very complicated for the victim. Many people seek advice from the Internet, but they find outdated information, or information that is not relevant to their situation. In any foreclosure case, we recommend getting a professional review, from a qualified agent who works in your state. This can eliminate any questions or misguided information. For the purpose of this article, we will simply be explaining the different actions that may happen throughout the legal process of mortgage foreclosure.

Obviously, by missing a mortgage payment, the homeowner forces the lender or servicing company to begin the collections and the foreclosure process. There are many other reasons a home can be foreclosed on, such as taxes or other court orders, but for the most part, it is because of missed mortgage payments. Once a payment has been missed, the collection process starts. Most mortgage contracts have an acceleration clause, which allows the lender to demand payment of the entire mortgage once you begin to miss payments. Once this clause has been evoked, the homeowner will owe the lender for the entire mortgage balance, missed payments, late fees, and legal fees. In most cases, though, the lender only wants the mortgage to be brought up to date. They want the total arrears, which is the missed payments and the extra legal and late fees. The lender will no longer accept your payments at this point, unless you are able to payoff the full arrears.

While this is happening, their attorneys are also filing a lis pendens with the local courthouse. Most people consider this filing the official beginning of the foreclosure process. A lis pendens is a notice to the court that a legal action is taking place and it essentially prevents the owner from selling or obtaining additional liens against the home until the lawsuit is settled. This notice is also provided to the owner and is published in local newspapers.

In a judicial state, you will be provided time to defend your case, or pay the arrears in full to settle the case. During this time, you could also work with the lender to establish a loan modification or repayment plan. If you can prove that the home is affordable under a new payment plan, the lender should be willing to work with you. If the court rules against you, a sale date will be set; this is usually called a Sheriff's Sale or Trustee Sale. This is where the home is sold at public auction and the proceeds are used to pay off any liens against the home.

Many states offer a redemption period, where the home can be purchased back, even after the sale. If you live in a state with a redemption period, you must be able to pay sale price in full to redeem your home. This is usually very hard, because getting a new loan after foreclosure is nearly impossible. You will need to find cash to purchase your home back.

After the sale and any redemption period, the owner must move out of the home and the new owner will take possession. If they refuse to move, they will be evicted. In most cases, the previous lender buys the home at the auction and the home becomes a REO (Real Estate Owned) property. They buy the home at the auction so they can sell it on the open market for a higher price. In today's market, lender are becoming more reluctant to buy these properties, because they are responsible for taxes and upkeep until the home is sold.

Another term that is often heard with foreclosure is short sale. A short sale is when the lender allows the owner to sell the home, at a loss, before the sheriff's sale takes place. When a lender allows a short sale, it is because they don't want the property and they would rather get rid of it as soon as possible. Even though it may seem like the lender loses money on a short sale, in the long run, the lender probably saves thousands.

Foreclosure is a very complicated process and every situation is slightly different, so if you are facing foreclosure, make sure you find information that works for your situation, or better yet, find someone who can provide specific help for your situation. You should always seek professional or legal help when facing foreclosure, so get a fee foreclosure evaluation today and learn more about your options.

This is simply too weird, but it seems that a specific type of fish is being used in California to assist authorities in keeping abandoned, foreclosed homes from turning into breeding grounds for mosquitoes carrying malaria or West Nile Virus. Where both swimming pools and foreclosure are common, the danger arises of the pools being left full or filling over time with rainwater and becoming standing pools of mosquito-infested water.

Treehugger.com states that, "The swimming pools of abandoned homes are perfect mosquito breeding grounds, there are worries about rampant West Nile Virus infections. In California, authorities are using airplanes to find green pools and are filling them with the Gambusia affinis, or mosquito fish, which eats the larvae."

The numerous articles on this so-called "foreclosure fish" are fascinating, although the little mosquito-hunter also has problems of its own: "In most cases they ate local wildlife in addition to mosquito larvae, and often didn't even do a better job of mosquito control than local fish were already doing." Maybe if the fish are confined only to the pools of abandoned homes, this issue would be taken care of?

In any event, the real life foreclosure fish story is also reminiscent of the "Bart the Mother" episode of The Simpsons, when lizards that eat birds are first feared and then perceived to be a help after destroying the town's pigeon population.

Skinner: Well, I was wrong. The lizards are a godsend.
Lisa: But isn't that a bit short-sighted? What happens when we're overrun by lizards?
Skinner: No problem. We simply unleash wave after wave of Chinese needle snakes. They'll wipe out the lizards.
Lisa: But aren't the snakes even worse?
Skinner: Yes, but we're prepared for that. We've lined up a fabulous type of gorilla that thrives on snake meat.
Lisa: But then we're stuck with gorillas!
Skinner: No, that's the beautiful part. When wintertime rolls around, the gorillas simply freeze to death.

Here are some of the articles that the above quotes from news stories were taken from:
www.conservationmagazine.org/articles/v9n4/foreclosure-fish/
www.treehugger.com/files/2008/06/the-forclosure-fish.php
www.newscientist.com/blog/environment/2008/06/foreclosure-fish.html

One of the most pernicious aspects of the housing boom was that so many professionals, on so many levels, took advantage of the ignorance of the average American in regards to all things financial. From the local mortgage broker and appraiser to the largest Wall Street firms, it seems everyone played some role in using the government's manipulation of the market to their own advantage.

Since the passage of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), appraisals for residential properties were to have been done by independent appraisers. But this is now how it works in the real world, as real estate agents, mortgage brokers, and even homeowners themselves will actively seek out appraisers who are willing to inflate (or deflate) the value of a home to meet loan requirements.

Obviously, the widespread use of manipulated appraisals has played a huge role in the myth that real estate values almost never go down. But now that property values have declined, with every homeowner that realizes the loan he or she obtained was $100,000 higher than the value of the property, more of this pressure on appraisers is being discovered.

But such fraudulent tactics and predatory lending practices on the ground put homeowners in positions where they area able to take advantage of laws to fight the lenders who relied on overstated, inaccurate incomes and inflated appraisals. And the practices of the lenders were no better, as many loans were calculated with incorrect Annual Percentage Rates (APR). The APR is the real interest rate that borrowers pay after fees, charges, and other expenses have been added in to the loan and is often higher than the stated note rate.

The miscalculation of the APR, while a blatant example of mortgage lender misconduct, is just one common mistake made on loans. Banks rarely, if ever, explain loan terms thoroughly enough to borrowers to make them understand how their mortgage works. Lenders set families up to fail, and then blamed the victims for failing to understand loan products that the banks should not have made in the first place if they knew borrowers did not know how they would work.

In fact, many lawyers and financial professionals who work for mortgage companies did not understand the complexities of the average subprime adjustable rate mortgage, let alone how the securitization process works, or who would end up owning the loan if it went into foreclosure. So it is inconceivable that borrowers themselves could be expected to know how these mortgages would work, especially since the most they were given in terms of explanation usually meant a couple pieces of paper written in confusing legal language.

Finding the fraud, misrepresentations, and neglect, though, gives homeowners the upper hand in negotiating for a solution to foreclosure. Banks, in order to defend against allegations of mortgage fraud and risk a class action lawsuit or regulatory action, are usually willing to spend tens of thousands of dollars on legal representation. Modifying a loan and offering reasonable terms to borrowers is much less expensive and time-consuming than fighting a lawsuit in a local court for the next two years.

And possibly the best part about all of this is that, with so many laws and regulations floating around, it is almost inevitable that lenders will blatantly violate one or another. But they rely on homeowners to be ignorant of these laws and willingly roll over once the foreclosure process begins. This is one reason every borrower who is threatened by the bank with the loss of their home should have competent research done on the loan.

One of the most important concepts homeowners in foreclosure should keep in mind is that they should never give up on their home unless they are good and ready to move out. If they have any desire to keep the house, then they should continue to pursue different solutions. But moving out prematurely and without examining every option available is always a mistake.

Unfortunately, it seems that many homeowners are just unaware of exactly what options they may have left, and what to do if they are turned down for one plan or another. Foreclosure assistance companies will recommend their one or two programs, while the bank may offer only one solution, and homeowners assume they do not qualify for a refinance. Being turned down, though, is not the end of the road, as other solutions should be immediately considered.

Possibly the first option that many homeowners consider when they are beginning to run into financial problems is to refinance their debt. If they have already begun missing mortgage, car, or credit card payments, however, their credit may no longer allow them to obtain a standard loan to reorganize their bills. Lenders are no longer providing any credit to people without perfect payment histories and verifiable income, which may leave many borrowers out of the traditional lending system.

But depending on the circumstances, hard money lenders and foreclosure loan companies are still able to provide solutions. Although the requirements may be strict for these types of mortgages, homeowners can use them to build a bridge from a short term financial crisis to a longer term recovery. Foreclosure refinancing has typically been offered by companies that are far more interested in the viability of the loan, rather than just making money on fees.

With the real estate market in turmoil in much of the country, foreclosure lenders may be difficult to obtain a loan from. Homeowners should also work directly with their current bank for various solutions. Although many homeowners consider a mortgage modification their first choice, banks may not be willing to provide this to any but the most qualified candidates.

In fact, many homeowners who have fallen behind in their monthly payment will be offered a repayment plan before a loan modification. This is because banks do not want to lower the interest rate on a mortgage because it cuts into its long term profits. While such a forbearance agreement may not be as beneficial as modifying the mortgage, homeowners should consider entering into an agreement, even if it is just to buy more time to work on a different solution.

Speaking of buying time, filing bankruptcy to stop foreclosure is also an option that many homeowners consider a last-resort choice. But if a sheriff sale is coming up and the bank is unwilling to postpone the auction, this option will put the process on hold immediately. The bank is unable to pursue any collection activities on a loan in bankruptcy, and the process may take at least a couple of months to be resolved, giving borrowers extra time to work out a better, more affordable solution.

It should go without saying that borrowers may wish to consult with a personal bankruptcy lawyer before going ahead and filing. A competent attorney can recommend which type of bankruptcy is most appropriate, as well as making sure forms are filled out correctly and completely. While it is a relatively simple legal matter, filing either Chapter 7 or Chapter 13 should be done with at least an initial consultation with an attorney.

There are numerous ways that homeowners may have available to them to stop foreclosure before a house is lost, and no borrower should just try one method and give up if it does not work. Even disposing of a property that can not be saved may be done in a number of different manners, some of which may help prevent damage to a credit score or allow owners to leave without worry of a deficiency judgment.

When borrowers are trying to save a home from foreclosure, circumstances almost require a customized solution. This is why so many options exist, because not every method will apply in ever situation, and one viable solution may be more affordable than another for a specific family. The important point is to begin researching different ways to stop foreclosure as soon as possible, and not give up even if one or another does not work out.

Homeowners facing foreclosure may feel as if they have very few options to save a home, especially if they have already tried to refinance and work with the bank to lower their payments. Unfortunately, these two common solutions are not easy to qualify for, and negotiating with a large mortgage company requires more than just submitting a few income documents. Borrowers, after making a few attempts to stave off foreclosure on their own, typically either turn to government solutions for help, or begin interviewing private assistance companies.

In any case of foreclosure, though, it is worth examining the pros and cons of seeking government help or using the free market to provide solutions. While government can provide subsidized assistance through voluntary programs and free advice hotlines and the like, these programs have little accountability and can move slowly. Private companies who have contractual obligations to clients, however, must provide a good service or run the risk of complaint or regulatory actions, but there is also a greater danger for fly-by-night scam artists.

Government solutions are funded by every citizen through their taxes or the Federal Reserve printing the money for the program into existence. This makes it cheaper for homeowners to request assistance from these programs, but there is far less accountability for the government to provide any meaningful results. In fact, because bureaucrats who run the program are not dependent on the success or failure of the citizens to save their homes from foreclosure, there is little incentive to provide excellent service to a homeowner.

The main benefit to using the government to help is that homeowners are aware up front that they can expect little in the way of service and that, even if they get less than promised, they have little recourse to hold the government accountable. After all, borrowers should not expect too much from a "free" program. But they also do not have to be on the lookout for scams to steal their money in up front fees for services never performed or target the equity they have in their homes. Government programs, then, are typically designed for people who have little expectation to save their house and who do not trust their own judgment to avoid foreclosure scams.

Private solutions, on the other hand, are paid for by the homeowners requesting the help. Borrowers must have some resources available to begin a process with private companies, but they usually enter into an agreement detailing exactly what to expect from the company. Everyone involved in the process, from the owner of the company down to the customer service representative, knows that their income depends on their ability to make a positive impact in the homeowners' lives and help them stop foreclosure.

The benefits to using a reputable private assistance company to save a home include the fact that borrowers are paying for specific services, and the agreement they enter into with the company details what each party can expect of the other. In the event of a failure, homeowners can hold the private company accountable and sue for relief or file complaints with regulatory agencies. This potential for scams is the most important drawback to trusting in private companies, though, but homeowners should not give their money away to anyone without doing a thorough background check and evaluation of the company's reputation.

Homeowners should consider using both government programs and private foreclosure help companies when they are facing a foreclosure. While government can provide advice and sources of help, they have little stake in the eventual outcome of the situation. Private companies, on the other hand, by the fact that they are paid for their services, do run the risk of scamming borrowers, but they can also be held more accountable to clients. Thus, borrowers should use both sources, with government providing some free advice and the free market providing actual work and solutions to foreclosure that can be measured.

The length of time between an initial foreclosure notice and the sheriff sale of the property depends on a number of factors, including the homeowners' state, the severity of the foreclosure crisis in the area, and how the borrowers respond to the bank's lawsuit. Some owners may have just a few months to find a solution, while others have more than six months between the time of the initial foreclosure notice and the auction of the house. And the entire foreclosure process will also depend on how long it takes for the case to wind its way through the local court system.

Foreclosure time lines are determined by state law and local county rules, so there is not one way for the process to go throughout the country. Notice regulations must also be followed by the lender and its attorneys, and these are determined by state law. If they do not serve homeowners with paperwork or fail to put notice in local newspapers for the required time before the sheriff sale, the foreclosure is not valid and the borrowers may be able to have a sheriff sale rescinded after the fact.

Also, long before the property auction, the foreclosure lawsuit must go through the local court system. The bank has to prove that homeowners are behind in payments and that it has the right to force the sale of the home to satisfy the defaulted mortgage. Unfortunately, because of the foreclosure crisis and the nature of the mortgage industry over the past couple of decades, there can be a lot of problems with this part of the process. Homeowners can take advantage of these weaknesses in the system either to stop foreclosure or to gain extra time to put their lives in order before moving out of a house.

First, the bank may not even own the mortgage note if it had been securitized and sold off to hedge fund and pension fund investors around the world, as is the case with nearly half of the mortgage made over the past decade. Homeowners should make the bank produce the original note in court to prove it has the right to take the house in the first place. If the loan was originated by a broker, subprime lending outlet, or a mortgage company that is now out of business, the bank that collects the payments now may not even have access to the note.

Second, the courts in some areas of the nation are so far behind in foreclosure cases that it might take months for them to hear a particular case. If the borrowers file an answer to the initial complaint, hearings will have to be set and this will take even longer. Sometimes an extra month or two can go by between the time a motion is filed with the clerk of court and when it is scheduled for a hearing before the judge in the case. And then homeowners can appeal any decisions the court makes that they feel were made in error, which drag out the process for even longer.

Until the bank proves it owns the loan and that borrowers have fallen behind on the payments, it can not go ahead with a sheriff sale. Borrowers are not "taking advantage of the system" any more than the lenders themselves are when they defend a foreclosure aggressively and demand the bank prove it has the right to take their home and sell it to satisfy a debt that the borrowers may not even owe to that particular bank. While some may say that homeowners who took out loans they could not pay and are now staying in homes mortgage-free for years are part of the problem, they are no more a part of the problem than banks requesting hundreds of billions of dollars in bailouts and not providing assistance to borrowers.

Thus, how long a period of time homeowners have between the foreclosure and the sheriff sale of the property depends on state law, how far behind the courts are in pursuing these cases, and how much they fight the bank's lawsuit. It is nearly always in the best interests of the owners to take as much time as possible to stay in the house without a mortgage payment, pay off other debts, and save up money for the future. Especially as the banks have plundered the people for trillions of dollars, any extra time that homeowners can save money and not pay their mortgage will be useful in the ongoing economic recession.

Saving money and keeping your home out of foreclosure can be very difficult in today's economy. A healthy diet and exercise can save you thousands of dollars each year in doctor and medical expenses. Many people complain that eating healthy is too expensive, but here are 10 affordable and healthy food items and ideas that can help lower your medical expenses and your grocery bills!

5 Low Cost Healthy Foods

1 – Beans. In a list of the top ten superfoods for antioxidant value as determined by a recent USDA study, small red beans was #1, red kidney beans and pinto beans were # 3 and #4, and black beans came in at #18. Beans can be purchased in bulk at a very low cost and will add a ton of fiber to any dish.

2 – Brown Rice. Unlike white rice, brown rice retains most of it's nutritional value. Brown rice is loaded with fiber, manganese, and Selenium. Eating brown rice can help you lose weight, reduce your chances of getting cancer, and even lower your cholesterol. Rice is very filling and inexpensive, so buy a large bag and make it part of your daily diet.

3 – Oatmeal. Eating a bowl of oatmeal every morning is a wonderful and inexpensive way to start your day. The oatmeal we are referring to is plain Quaker oats (or similar), not flavored, which contains added sugar. Oatmeal is packed with nutrients and will fight bad cholesterol and reduce the risk of heart disease.

4 – Chicken. Buy the chicken whole for a much lower price. One serving of chicken provides 70% of our daily protein needs. Chicken can help prevent Alzheimer's, prevent cancer, and help your cardiovascular system.

5 – Eggs. I can find eggs on sale for $.99/dozen and Costco sometimes has them for $.99/two dozen. Eggs are a good source of protein and have numerous health benefits, such as lowering the risk of breast cancer and preventing mascular degeneration. Contrary to popular belief, researchers have now determined that eggs do not raise dietary cholesterol.

5 Ideas To Eat Healthier And Save Money

1 – Cook foods from scratch. When you prepare your food from scratch, you can save money and eliminate all the unhealthy additives in processed foods. When cooking from scratch, you know exactly what your eating and you control the calories and fat. Preparing meals in bulk will be less costly and you can freeze any extras to use at a later time.

2 – Substitute low fat alternatives. This can be as simple as using ground turkey instead of ground beef, or low fat margarine, instead of butter. One example is using apple sauce or yogurt in cookies instead of butter. They cookies will still taste delicious, but you've eliminated 80% of the fat! Another simple alternative is to replace soda with tap water.

3 – Use frozen fruits and veggies. Frozen fruits and vegetables are often priced much less than their fresh counterparts, but still provide the same nutrients. Many fresh vegetables have traveled so far to get to your store that they've lost a lot of nutritional value by the time you eat them anyway.

4 – Shop at a local farmers market, or better yet, pick up your fresh produce directly at the farm. Buying food locally not only saves money, it's better for the environment. I go to the strawberry farm and pick my own berries for $5.00 a flat. That's about 1/10 of the price in stores and it only takes about 10 minutes to pick them. Many farms allow you to pick up your produce directly at a reduced price.

5 – Share meals when eating out. Most restaurants serve way more food than one person should eat anyway, so save money and share or take half home for later.

When buyers purchase a foreclosure home, they should not be surprised if the house is damaged or in a state of disrepair. Even if previous owners did not cause any damage, banks do not take care of properties while they have possession, which means that the condition may deteriorate rapidly. But purchasers often have no one to hold accountable for damage to the house, as the bank protects itself and former owners are no longer responsible for the house after the foreclosure.

If a new owners bought a foreclosed house from a mortgage company in "As Is" condition, then there may simply be no one to sue for damage to the property. It will be pretty clear to a judge from the as-is clause in the real estate sales contract that the buyers purchased the house understanding that there may be severe problems with it and that the bank was not taking responsibility to fix these problems before the sale.

If the house was not bought in as-is condition, then the new homeowners would have to sue the mortgage company that the property was purchased from. The bank was the previous owner of the house due to the transfer of legal ownership from the foreclosure sheriff sale and was responsible for upkeep and making sure it was in salable condition. This makes it the only party to sue for damage to the house, but only if the property was not sold in as-is condition.

But there is little chance the new owners would have any case against the former homeowners who lost the house to the foreclosure process. And anyway, they went through foreclosure and lost their home -- it is unlikely that they will have much money to collect for repairs to a property they no longer own. Furthermore, they can not even borrow money to pay the judgment against them if they are sued for damage they may have caused before they moved out.

The foreclosure victims have no responsibility for the house after their ownership interest has been transferred at the county property auction. At that point, it is up to whoever purchased the property (usually the bank) and that now owns the house either to disclose any problems before the sale or have them repaired.

Since banks do not care to do much with foreclosures, though, it is more likely it will sell the property in as-is condition and let the purchasers know the lender will not take any responsibility for anything wrong with the house. This is one excellent reason why foreclosure buyers usually have their own home inspection done before closing on the house. If there is a lot of damage, either the price will be negotiated down to take into account repair costs, or the buyers may simply walk away from the deal.

If the lender does not sell it to the buyers in as-is condition, then it might be responsible for making any repairs to the house for damage that was never disclosed to the purchasers during the sales process. But the owners would have to sue the bank responsible for disclosing the damage -- not the former owners possibly responsible for causing the damage.

There are 1000's of reasons to avoid foreclosure, but here are the top 10 reasons according to reader submissions on foreclosurefish.com.

Number 10
Moving to a new home will be too far from work. Many people purchase their home because of its close proximity to where they work. After foreclosure, it's very hard to find a new home in the same location, so victims must find a new job in a more affordable area.

Number 9
Business is run out of home or property. Families often use their home or property as a way to generate income, such as farmers, or anyone who owns a home business. If the home is taken away, it essentially takes away their livelihood as well. Families in this situation have more to lose than others and often need to start their entire life over after foreclosure.

Number 8
Don't want to move; the physical act of moving. - Many foreclosure victims have lived in the same home for their entire life and moving all their belongings to a new home would be nearly impossible. They can't afford to hire movers and they can't physically move everything on their own. In many cases like this, the sheriff comes with a moving crew and all the belongings are moved out into the streets. I personally witnessed this happen and before the home owners got home, all their belongings had been stolen right from the sidewalk. People ignored the yellow police tape and took whatever they wanted.

Number 7
Don't want to ruin credit scores. After a foreclosure, it's likely that credit scores will drop to under 500 points! This means they can no longer get approved for new credit, or if they can get approved, it will be at a very high interest rate. Homeowners in this situation will have a very hard time recovering from the effects of foreclosure.

Number 6
Can't take children out of school. Anyone with children still in school understands how hard it can be to find the right school for their children. Lack of affordable rental housing can uproot families and force children into a strange and uncomfortable situations.

Number 5
Can't afford to get a new home. It's estimated that nearly 25% of all foreclosure victims rely on friends or relatives for a roof over their head, while they get back on their feet. Getting a new loan after foreclosure is impossible for most and renting an apartment can be just as hard. Being forced to live with friends or relatives is a very humbling experience.

Number 4
They don't have anywhere else to go. What happens when there are no friends or relatives to stay with? This is probably the most dreaded situation of all; becoming homeless. When families can't afford a new home and have nowhere else to go, they become homeless after the foreclosure. I don't think we need to explain the downside of being homeless, but needless to say, this is one of the biggest fears of people in this situation.

Number 3
Don't want the bank/lender to take all their equity. When a homeowner goes through foreclosure, the fees and expenses can be ridiculously high and the lenders end up taking away all the equity from the owner. Homes are also sold for much less than their true value, so even if there was equity before the foreclosure, after the home is sold, there will be nothing left for the homeowner.

Number 2
Don't want to move; emotional reasons. Many times, the home being foreclosed on is a home that has been in the same family for many generations. The owners have childhood memories and remember stories their parents and grandparents told them about the home. If these homes fall into foreclosure, the victims will do almost anything to save the home. When eviction time comes, it's not uncommon for the sheriff to find these homeowners barricaded up and waiting with a shotgun!

Number 1
Don't want friends and family to know about personal and financial problems. Foreclosure is a process that happens in the court system, so almost everything is public record and advertised in the local newspapers. When someone goes through foreclosure, their personal troubles and hardships can end up as front page news!

If you are facing foreclosure, there are many option available, including government bailout loans, loan modifications, and many other legal options to stop foreclosure. Find out what options will work for you by getting your free foreclosure evaluation today!

Sometimes, it is difficult to know when you have been beat, or when it is time to give up on something. With foreclosure, it can be quite different: it is actually very easy to know when it is time to throw in the towel. Foreclosure is a very costly procedure, both mentally and financially, so knowing when to stop fighting and when to move on with your life is very important. The only real issue for homeowners is to realize when it is time to quit fighting and how to successfully navigate the foreclosure process, with the least amount of damage to your credit.

Step #1 – Knowing when to quit
As mentioned above, with foreclosure, it may be very simple to decide when you should give up your home. Once you have examined these few issues, you should know if saving your home from foreclosure is still possible.

• Can you afford your home if your interest rate was set back to its original amount? If you can and your home has not already been sold, then keeping your home is still possible.
• Do you have enough money to pay 25% more than your existing mortgage payment? A repayment plan is possible if you can make your normal payment, plus 25% extra to pay the arrears.
• Even if you can afford your payment, is your total payoff more than the home is worth? If you are paying more than the home is worth, then why would you want to keep it? Unless you have a very strong sentimental attachment, or you expect the value to drastically increase in the near future, it is probably time to move on.

In general, you can calculate your total payoff at a 9% interest rate, over 30 years, if you are considering a mortgage modification or other payment plan. If this new payment is affordable for you and you are not paying more for the home than it is currently worth, then saving your home is probably an available option for you, as long as your income is stable enough to get through the plan.

Step #2 – Giving back your home without foreclosure
First, homeowners should be clear on one important issue: far too often, people who do not want to keep their home mistakenly believe they can just give the deed back to the lender and walk away free and clear. They think they can keep their perfect credit score and give back the home without facing foreclosure. This virtually never happens. Your lender does not want your home and they certainly do not want you to have the ability to give it back and walk away with no negative consequences.

The nearest option available that resembles this is a deed in lieu of foreclosure. This is when the lender accepts the deed for your home and forgoes the foreclosure process. If done correctly and quickly, this method could be your best alternative to foreclosure, but if not completed correctly, a deed in lieu can be more time consuming than going through the legal process and losing the home at sheriff sale.

Another alternative to foreclosure is to sell the home using a short sale. A short sale is when your lender accepts an offer on the home for less than what is owed. For example, if you owe $200,000 on your home, but the best offer you have is $130,000, then your lender may accept $130,000 as a full payoff. When you lender accepts such a settlement, this will (in most cases) stop foreclosure at any point of the process and if a deficiency judgment is not allowed, it can prevent any further damage to your credit.

Professional help is highly recommended for either executing a deed in lieu or attempting to sell for less than the total amount owed on a mortgage, to avoid the many legal “loopholes” and financial pitfalls that accompany either of these options.

If going through foreclosure is inevitable, then your best bet is to get through it as quickly as possible. Do not drag things out or waste time, explain your situation to your lender and make sure they know you want things to move as quickly as possible. Many homeowners and/or lenders drag the foreclosure process out for a year or longer. If this does last for more than twelve months, you can expect your credit to take another twelve months or even longer to begin the process of repairing itself. However, if the foreclosure only lasts for three months, your credit should be much less damaged and will not take as long to repair. Of course, this is assuming you only missed your mortgage payments during your hardship and your credit was good up to that point.

Step #3 – Stop dwelling on the past and look towards the future
Foreclosure is something that is happening to many people right now, so you are certainly not alone. There is no reason to keep yourself down or think that you did something wrong, you just need to make a fresh start and move on with your life. Your first step should be to get your income and expenses back on track. Find a new place that is more affordable and try to save as much money as possible.

After your income is stabilized, you need to begin the process of credit repair. The fastest and easiest way to repair your credit is to pay off everything negative on your credit report. You will need to order copies of all three reports and begin to settle any outstanding debts. There are credit repair companies that can help you settle these debts for much less than the amount owed, so it may be a good idea to work with a credit repair professional. But be careful, because there are very few qualified debt settlement and credit repair professionals out there. A handful of companies you find online, or advertising on TV are frauds and outright scams.

Foreclosure scam artists are one of the most dangerous predators in the real estate industry, targeting homeowners who are in desperate situations and tricking them into giving up their homes or much-needed cash that could be used to pay the mortgage or begin the process of financial recovery. Unfortunately, many borrowers are taken in by these sociopaths, who use the same old tactics over and over again to persuade owners to trust in unrealistic schemes that promise everything from saving the house to lowering the monthly payment with virtually no work or input from the homeowners.

One of the latest foreclosure scams to be caught, this time in Monterey County, California, targeted dozens of homeowners and ended up taking more than $65,000 from desperate foreclosure victims. The Mercury News reports on this story in which three suspects have been caught and charged with criminal conspiracy. One suspect has also been charged with numerous other crimes, including "residential burglary, elder abuse, and grand theft." But how they took advantage of their victims is another case study in the tried-but-true tactics of scammers.

The trio allegedly promised their victims, mostly Spanish-speakers in danger of losing their homes to foreclosure, that they could help negotiate lower monthly mortgage payments or refinance mortgage terms with lenders.

Prosecutors allege the suspects met with prospective "clients" from Feb. 10 to June 15 at a Gonzales home, where the homeowners gave the trio their loan information, filled out loan applications and paid advance fees of as much as $2,800 for the "service."

Though the suspects allegedly told their "clients" the money was a "loan processing charge" and "fully refundable" if the renegotiation efforts failed, when several of them requested a refund they were denied. Eventually, the "clients" were unable to contact the suspects.¹

In three short paragraphs, homeowners can learn exactly how most foreclosure scams work. An individual, usually representing an official or reassuring-sounding company approaches borrowers in default and promises to help them in any number of ways to stop foreclosure before time runs out. The owners, many times elderly or foreigners who speak English as a second language, fall for the charm and convincing nature of the scammers, and sign up for the service without performing enough due diligence to know if they can trust the company.

The fact that the scam artists took loan information from the owners in this situation described above is simply a charade designed to get the homeowners comfortable with giving information and eventually money in order to save their home. The victims mentioned in the article gave nearly three thousand dollars to the scammers and received nothing for the time and resources they expended trying to avoid the loss of the house. This is far too common a tactic used by foreclosure scams, which pretend to do a lot of work but really just do everything they can to wring money out of homeowners.

Finally, refunds and calls back from bona fide foreclosure con artists are virtually nonexistent in the real estate market, although guarantees of "fully refundable processing charges" are ubiquitous. Once homeowners hand over a money order for thousands of dollars, the scam operators disappear, moving onto their next targets and leaving previous clients to deal with their own foreclosure mess. Not getting a call back from an assistance company is one of the most common characteristics of this type of fraud, because the company does not dedicate resources to communicate with clients it has no intention of helping in the first place.

It is too bad that so many homeowners rely on others to help them avoid foreclosure when just a little bit of guidance, research, and advice can help them work with their lenders on their own. Hiring a company to provide legal research or document lending law violations can be a much-needed service, while other professionals can provide high quality loss mitigation assistance with valuable homeowner input. But simply handing over a check and expecting someone to "take care of" foreclosure is most often a trap laid by psychopaths taking advantage of the desperation of the possibility of losing a home.

Source:
¹ http://www.mercurynews.com/breakingnews/ci_10246964

Two of the aspects of foreclosure that banks rely upon when attempting to steal homes from borrowers is homeowners' ignorance of how the mortgage works and what information the lender really needs to show to prove it has a case. But if the homeowners remain in the dark, and banks are not challenged on the issues, the courts will allow the lawsuit to proceed as far as possible, including evicting homeowners for the sake of banks who may not even have a right to complain. A couple of written requests made by homeowners to lenders, however, can have dramatic effects on a bank's willingness to negotiate a more reasonable solution.

As has been mentioned in numerous articles, it seems that mortgage companies are having a difficult time producing the original note that proves that they bought the loan and have the right to foreclose once the payments are delinquent. Judges have thrown out dozens of cases where lenders could not show they were even entitled to collect the monthly payments because they could not conclusively show they owned the mortgage. Homeowners should take advantage of this by requesting the promissory note that they signed when pledging their house as collateral for a mortgage.

In fact, this written request can be quite simple, comprising only a few sentences giving the bank a couple of weeks to produce the note for the borrowers' inspection. Since the house is security for the loan, the bank should be able to show the document is in its possession within a period of ten to fifteen days, at the most. If the owners receive a form letter back with anything other than the promissory note, it may be an indication that the information is not in the lender's possession, and there may be no ability to sue for foreclosure.

Borrowers dealing with a loan servicing company, which owns only the rights to collect the monthly payments, may have even more complaints about junk fees, forced insurance, escrow account deficiencies, and other equity stripping scams. Thankfully, the government has provided an avenue for homeowners to send a "Qualified Written Request" (QWR) to their mortgage companies in order to have their complaints addressed. Section 6 of the Real Estate Settlement Procedures Act (RESPA) outlines the terms under which such complaints may be made.

The mortgage servicer must acknowledge receipt of the QWR within twenty days, and respond to the complaints within sixty days. The bank may either correct the situation or explain its position to the homeowners, but it may not ignore the written request. Although it is unlikely to win a lawsuit against such a mortgage company, noncompliance with the Act leaves the lender open to private lawsuits for three years after its inability to respond properly to the QWR. Class action lawsuits may be more effective, and there is also a three-year time limit for initiating those.

When homeowners are facing foreclosure, they often see their equity quickly disappear under a mound of fees and interest charges that may not even be entirely legal. In addition, the bank attempting to take the house might not even have standing to complain or be able to prove it owns the mortgage it is claiming to collect on! For the small cost of postage for certified mail, sending a request for the promissory note as well as a Qualified Written Request under Section 6 of RESPA may be a simple way to begin the process of defending against the bank's attempted real estate theft.

(Note: for any sample copies of a Qualified Written Request or a letter to produce the note, please email us for an editable sample letter.)

The most important factor homeowners in foreclosure need to remain aware of is how much time they have left to work out a solution, either to save the home or unload it with the least financial damage. The bank, working through its local attorneys, will typically attempt to push through the legal process as quickly as possible, in order for the lawyers to get paid and the bank to have an empty house they can sell on the market. Homeowners, on the other hand, would like more time and negotiating room in which to put together a more beneficial solution.

One of the easiest, most effective ways to get more time to stop foreclosure is just to ask the lender for help. A call to the mortgage company, followed by a written request, can postpone the initial filing of the foreclosure lawsuit, or even convince the bank to delay a sheriff sale just a few days before the property is scheduled to be auctioned. Since the lender is in control of the entire process of taking the house, it can dictate if and when it wants the courts or local government to proceed with certain aspects of the case.

However, simply flooding the mortgage company with delay requests, while effective once or twice, is not a long term solution to foreclosure. In fact, every time the homeowners ask for more time, they should be working on a specific plan that will help get the house completely out of the legal process and pay off the loan or pay back the arrears owed on the loan. Banks are much more willing to extend the time to save a house if it looks as if the borrowers are actively seeking out realistic methods.

Some banks, though, will eventually reach a breaking point at which they will no longer be willing to extend a sheriff sale or help out with any other solution the homeowners present. At this point, there may be two other ways that the borrowers can get more time to save the house, both of which involve entering the court system. The first way is to file bankruptcy, while the other involves defending the original foreclosure lawsuit.

Once homeowners file either Chapter 7 or Chapter 13 bankruptcy and include their house debt in the petition, the lender must cease all collection efforts. This includes halting the lawsuit at whatever point to which it has progressed, and canceling any scheduled foreclosure auction of the property. As long as the property is tied up in the federal bankruptcy court, the mortgage company has no other option other than to work with the trustee to attempt to collect on the mortgage debt. This can tie up the house for several additional months while the owners either negotiate down the debt or work on another final solution.

And while some homeowners may not wish to enter the local courts to defend against the bank's lawsuit against them, this may be the single most effective way to get more time and prove to the bank that the owners are not willing to go down without a fight. Potential predatory lending or other lender misconduct may be enough to convince the bank that working out a mortgage modification or delaying the auction to help the borrowers sell their home will be less costly than litigation. As well, any motions or defenses the homeowners bring to the courts may take additional months or years to resolve, not to mention possible appeals.

Too often, homeowners in foreclosure are working on a solution that would stop the foreclosure process completely, but they are just running up against a deadline, after which the solution would no longer be viable. It is in these cases that borrowers should do everything they can just to get more time. The easiest way to do this is simply to request the bank to hold off on any more foreclosure proceedings, but bankruptcy and litigation are also quite effective at postponing an eviction. As always, though, it should go without saying that, unless the owners have some reasonable solution, constant delays will only prolong the inevitable.

One of the most devious aspects of the mortgage industry is how loans are originated, packaged into large deals, sliced up, and sold to investors around the world. All the while, the borrowers are led into believing that the company they are making payments to is the owner of the loan. Nothing could be further from the truth, and it is in the interests of homeowners to find out who really owns their mortgage, especially if they are being sued for foreclosure.

At every step in the process of originating and securitizing mortgages, the potential exists for the banks to violate any number of federal or state laws designed to protect homeowners against predatory lending. If it can be found that the bank has broken any of these consumer protection laws, its ability to proceed with a quick foreclosure is drastically diminished; in fact, it may be better for them at that point to offer a mortgage modification or other solution to avoid a lengthy, expensive legal process.

The originator, servicer, and holder of the mortgage are three entities that are vastly different from each other. While the originator approves the loan and secures the funding (from customer deposits or lines of credit through Wall Street investment firms), the mortgage servicer is the company hired to collect payments and proceed with foreclosure in the event of default. The holder of the mortgage is the eventual owner of the loan, but who this ends up being is usually quite unclear.

Especially with the large-scale securitization of the mortgage industry over the past decade, finding out who actually owns the loan paperwork can be downright impossible. In a typically confusing deal, a large pool of mortgages are originated and immediately sold to a Structured Investment Vehicle (SIV), which is created solely to hold the mortgages and act as a middleman between the servicer and end investors.

Then, the rights to income from these loans are cut up into "tranches" and the tranches are then sold to investors such as pension funds or hedge funds in the form of bonds. The right to collect the payments from the homeowners is given to the servicer, who then forwards the payments to the SIV, at which point the income is divided into the appropriate tranches and sent to investors.

But who actually owns the mortgages that the SIVs hold? Because unless the owner of the loan forecloses on the house once the payments are in default, the company suing the homeowners may have no legal ground to stand on. People can not be sued for defaulting on a debt by just anyone -- they only entity that can sue is the one who owns the loan (on its own or through attorneys). When mortgages are sliced up and held in specialized vehicles that do nothing except act as a conduit between the servicing company and the investors, ownership of the loan becomes a little fuzzy.

Back at the mortgage servicer, though, when properties fall behind in payments, it is the servicing company that is expected to proceed with the foreclosure. Even worse, the servicing company may only have received the rights to collect the payment and have no idea who has possession of the original loan paperwork. When they try to sue, if challenged, they may be unable to show the note. Without proving to the courts that they have the note, it is simply impossible for them to sue for foreclosure of the loan they have no ownership interest in.

Homeowners may find that they have no idea who has the right to their payments, who they can negotiate with to stop foreclosure, or who is in possession of their mortgage. Once they begin asking questions to find out this information, they may quickly realize that no one else has the answers, either. But this rarely stops the banks from pursuing foreclosure through the courts, since the banks have so many more resources than the typical borrower. Knowing that this "who owns the note" challenge can not be adequately explained, though, homeowners should begin using it more often against predatory lenders.

Homeowners are always receiving tips on what to do to save their properties from being taken away by foreclosure. Call the mortgage company right away, speak with an attorney, put the house on the market just in case, and many other pieces of advice are important and can mean the difference between preventing foreclosure and ending up homeless. But there are also a number of things to avoid when a house is in danger of being auctioned off and the owners eventually evicted.

The most important aspect of the foreclosure process that needs to be kept in mind is that the lender has most of the power to continue with or halt any legal proceedings. It can stop a sheriff sale a few hours before the house is scheduled to be auctioned or give homeowners more time to work on other solutions to foreclosure. If the owners have made a case that they deserve a second chance, the bank will also stop any further proceedings in the county courts.

So borrowers must avoid ignoring the frequent calls from the mortgage company or hiding in fear. Staying in contact with the bank throughout a financial hardship will be important if one method to save the home falls through at the last minute and the owners suddenly find they have little time to do anything. But ignoring the lender for months and then requesting more time a few days before the public auction has a far lesser chance of success.

Homeowners should evaluate their options to keep the house with a variety of sources, both public and private. With new government programs being legislated into existence by the day at both federal and local levels, there may be several assistance programs that can help stop foreclosure with public funds. Private sources include foreclosure specialists, other banks, the foreclosing lender, and private charities.

But as they are researching various solutions, homeowners should keep in mind how vulnerable they are to scam artists, which is one reason it is important to avoid signing over the deed to the house. This is possibly the most common characteristic of foreclosure scams that target the equity in a house or attempt to convince owners to pay the scammer rent instead of paying the mortgage company. Once borrowers have signed a quitclaim deed or otherwise transferred the property without also paying off the loan, they will have lost control of the house and will still be in foreclosure.

A final action that homeowners should avoid is moving out of the house prematurely. Even if they are scared of being evicted, it is better to stay in the house and consult with an expert who can explain how much time they still have left. But once the borrowers move out, the bank can have the property declared abandoned by the county and take possession much earlier. Any possessions left in the house are usually taken by the local government, and getting back into the house can be extremely difficult for the owners.

Some of the most common mistakes that homeowners make when facing foreclosure are ignoring the lender out of fear, signing over the deed in a desperate attempt to save the house, and moving out before they are required to do so. Doing any one of these may push the house further towards the point of it being impossible to halt the foreclosure in any reasonable manner. But borrowers who avoid taking these actions will be able to maximize their chances of avoiding eviction, while maintaining control over their properties.

In defending against a foreclosure action, homeowners usually must make frequent attempts to contact their lender, an evil but necessary part of the process. This is typically the step in any plan to save a home that borrowers find the most difficulty with, not only due to their own embarrassment at falling behind, but also because of aggressive, rude, or incompetent customer service agents. But it is important to make the calls in order to work out a solution, and homeowners should record or document every time they contact their mortgage companies.

At the very minimum, borrowers should keep notes of every time they call the bank, starting with the time they call, the time they talk to someone live, that person's name, and what went on during the conversation. It is far too common for customer service agents to lose paperwork that homeowners fax, fail to write notes in the loan's file regarding a negotiated solution, or otherwise make the entire point of a homeowner's contact completely worthless. If the owners do not document the phone call and act on it, it will likely become just another failed attempt at working out a plan with no follow-up by either the borrowers or the lender.

Because most lenders have an automated system that informs homeowners that the phone call may be recorded, it is in the best interest of borrowers to keep their own copies. Although it is not legal in some states to fail to inform the other party they are being recorded, it is quite legal to record a phone call if both parties are aware of it. And with all banks informing their clients that they are being recorded, homeowners can make tapes of their contacts with the bank without fear of breaking the law.

One surprisingly effective tactic is, after a phone call is done, simply not to hang up right away and just be quiet and listen. Often, bank customer service reps will also fail to disconnect and begin talking to co-wowkers about how annoying borrowers are, or the fact that they have already decided they will not provide any help to work out a loan. This attitude by some loan workout reps should be a strong indication that the bank is in the practice of simply stringing along homeowners, giving them false hope until the bank can steal the home. But borrowers will not be aware of this tactic unless they hang on at the end of phone conversations for a few extra seconds when the customer service rep believes the call has ended.

Regardless of how the customer service agent wants information sent to the bank, homeowners need to follow every important phone call with a letter. Loan workout documents or short sale offers can be faxed to the bank, but it is likely the paperwork will never be received, get lost, or just be thrown on the pile of 800 other files the bank representative is working on. Sending a certified letter with return receipt requested will, if nothing else, show the courts or regulatory agencies that the borrowers made an attempt to work out a solution and the lender may be forcing a foreclosure by "losing" negotiation offers.

But homeowners also need to do everything they can to keep on top of the lender's requests for information. When the mortgage company requests a package of financial documents or a hardship letter, the borrowers should comply with the request as soon as possible -- usually no later than 24 hours after the phone call. Waiting an extra week to gather tax documents or acquire fresh paystubs will hurt more than help. But immediately sending a fax of the requested information, combined with a phone call to make sure the bank received the fax, as well as a mailed copy of the documents, should be enough to show that the owners have made every attempt to stop foreclosure and comply with the lender's requirements.

Keeping in close contact with a mortgage lender eat up as many resources as a part-time job, but homeowners who want to work with their banks need to put in much effort to negotiate a mortgage modification or other solution. Lenders have thousands of foreclosures to work with, and the most persistent, hardest-working borrowers will be the ones who receive a solution, while the less diligent will simply lose their homes. In every case of foreclosure, though, it is important for owners to maintain open lines of communication with the bank and document or record every conversation, and follow up by complying with the bank's requests and sending copies of every document via certified mail.

When a property goes into foreclosure, homeowners may immediately believe that they have no ownership left in the house and no responsibility for keeping the property in good condition. However, for as long as they are the legal owners of the house, the borrowers must make sure the property is reasonably maintained. Only at the final stage of the foreclosure process will their responsibilities be transferred to a different party.

For as long as the process is going on through the local courts, the original owners of the property will still have legal possession. This makes them responsible for maintaining the property, paying the real estate taxes, and keeping homeowners insurance paid up to date in case of damage or destruction. Since they still own the house, they must keep on top of all of the responsibilities of maintaining the property in good condition.

Of course, it is especially important for homeowners to keep up on the maintenance if they are eventually successful in finding a solution to stop foreclosure. Letting a home fall into disrepair and then saving the home but having to clean up damage afterwards is not a good start to financial recovery. Even if it is just a second home or investment property, homes in foreclosure should be kept in as good of condition as possible.

For homeowners who are unable to avoid losing the property, though, they will no longer be responsible for maintaining it when ownership is transferred through the foreclosure legal process. This typically happens once the sheriff sale has been conducted and the winning bid confirmed by the local court system. At this point, the foreclosure victims will no longer have title to the home, and it will be up to the new owner (usually the bank) to make sure the property is kept up.

Unfortunately, there have been more instances during the current foreclosure crisis of homeowners willfully destroying their homes in anger at the banks. While this is an understandable response to the deception of the mortgage markets and theft of the home through foreclosure, such destruction hurts the community and the homeowners themselves more than the banks. Such homes can not be sold, as the price to rehab them may be too high, and the properties may attract squatters or other crime.

Although homeowners facing foreclosure may not want to deal with an expensive property any longer, it may be the best idea to maintain the house until the bank has finished foreclosing. Also, voluntary damage should be avoided, as it may create even more legal headaches down the road for the borrowers. Maintaining or saving a house may not be the highest priority for owners who just want to move on with their lives, but keeping a home in decent enough shape can prevent having to revisit the emotional experience later on in another court setting.

Many loans were, and still are, written using a variable interest rate mortgage. This is a mortgage that remains fixed for a few years, and then adjusts (usually higher) based on a certain financial market. Many of these mortgages can adjust up to 2% every year! These loans start at a lower interest rate, but once they begin to adjust, they become unaffordable very quickly. Mortgage brokers and agent have tricked homeowners into these mortgages by saying they will refinance them as soon as the mortgage starts to adjust.

In theory, this concept works, but the problem is, when the real estate market takes a turn for the worse, it eliminates the equity needed for many people to refinance. The borrowers credit may also prohibit them from refinancing at a later point. Because these lenders prey on borrowers with sub par credit scores, their chances of improving their credit and qualifying for a better loan are very small This causes these borrowers to be stuck in a loan that continues to increase and the payments become impossible to make.

Unscrupulous lenders also use their own appraisers, who add to this problem with inflated appraisals. Appraisers almost always get the majority of their business from loan brokers and real estate agents, and like any service oriented company, they feel the need to keep their clients happy. In a refinance, a higher value means a better loan for the borrower. Many brokers need the appraisal to come back at a certain amount in order to be approved, and the more LTV (Loan To Value) a property has, the better the terms of the loan will be. This causes the mortgage brokers to demand the highest possible appraisal from their appraisal company. If the company can't provide the best appraisal, they they will find one that will return the values they need. This, coupled with a soft real estate market, is causing millions of homeowners to be completely upside down in their houses, and when a home has negative equity, it can't be refinanced.

When a home owner is in a mortgage that can't be refinanced, and an interest rate that increases on a regular basis, a foreclosure is almost inevitable.

Homeowners caught in this type of situation can fight back. If you feel your lender has misled you, or if your appraisal was higher than the property was worth, then it's time to fight back!

Here are a few key reasons you may have to fight against your lender:

Appraisal seemed too high for the property
Loan agent said one thing, but made you sign something different
Documents were not properly explained or you were rushed through the closing
Loan agent promised to refinance if the rate increased
You felt pressured into a loan you didn't fully understand
You were asked to falsify statements or documents to prove your income

If you feel like you are a victim of your lender, then you need to get help immediately. We see many cases like this every year and lenders can be forced to provide a new affordable mortgage. Even if the foreclosure process has already started, help is available. A local attorney who specializes in mortgages would be a good choice if you want to work with someone face to face, or companies like ours, who specialize in foreclosure assistance with the lenders can provide help nationwide. No matter what you do, make sure you get help immediately before you lose your home because of a wrongful foreclosure.

When buyers are looking into purchasing a foreclosed home, they may have to wade through dozens of properties in various states of disrepair. Either from homeowners taking frustrations out on the house or simple neglect by a bank owner, foreclosure properties are often in a state that requires extensive work before they are livable. However, occasionally homeowners may come across a listing pointing out a "clean foreclosure." How this type of property differs from the average can mean savings for home buyers and a beneficial solution for the banks owning such houses.

A "clean foreclosure" is simply a phrase used by Realtors when they list foreclosure properties on the open market after the sheriff sale has been conducted. The term relates very little to the condition of any other non-foreclosure property that is listed and is mainly used to differentiate between the standard foreclosed home and the so-called clean one. But due to the nature of these properties and the legal process that takes a home away once the mortgage is in default, designating a property in this manner causes it to stand out just a little bit.

Some homeowners, if they are unable to stop foreclosure and will soon be forced to leave their home, may cause various damage to the property. This may be in an attempt to get back at an uncooperative bank for taking the house and to take their frustrations out against the county legal system, which may allow the foreclosure to go through regardless of predatory lending practices or mortgage lender misconduct. But the fact the many foreclosed homes may have such willful damage means that repairs may need to be done by new buyers.

Also, depending on how long a property sits on the open market, it may fall into disrepair. After a year of having no heat or cooling, even houses in great condition will start showing the effects of the weather. And it may take only one severe storm for the roof to start leaking or the basement to flood. Even if the former owners did no damage when they left, in the absence of any serious community effort at maintaining such areas of economic devastation, a property which sits empty for a long period of time may become a target of random vandalism, squatters, or thieves.

Obviously, homes in this condition will need extra work before they are completely livable again, and the selling price for damaged foreclosure homes can be far less than a typical house for sale. Clean foreclosures, though, are properties that, although the owners went into default and had their home auctioned off, are not exhibiting any extraordinary signs of damage or depreciation yet. The sales price may be lower than the average price for such a home, but it will not need as many repairs as the typical foreclosure home, either.

In effect, by designating a property as a "clean foreclosure," Realtors are pointing out that purchasing this house may represent a great deal for buyers. As banks are often the owners of foreclosed homes, they can be more willing to work out an arrangement beneficial to purchasers, since they would just like to make up the loss on the legal process and unload the property. With steep declines in housing prices across the country and an unabated foreclosure crisis putting many homes on the market, finding such a property in a clean state for a reasonable price can entice more buyers back into the housing market.

How many times can a home go into foreclosure before the bank finally gives up and stops accepting any payments? For homeowners who have fallen behind more than once, or who own more than one property and are contemplating foreclosure on several houses, this is a serious issue. Thankfully, there is little real danger that a mortgage company will simply stop accepting any payments, even if the owners fall into foreclosure numerous times.

Homeowners can experience their house going into foreclosure as many times as they face a hardship and run out of money to pay the mortgage for a period of months. The bank will wait until the owners are usually 3-6 months behind, and then it will begin to file the foreclosure paperwork in the local courts. If the homeowners pay the arrears back before the property is auctioned off, then the foreclosure process has to stop for the time being. Of course, if they fall behind again, the process will start up from the beginning.

No matter how many times they fall behind during the life of the mortgage loan, though, it is unlikely that the bank would just stop taking any payments from the owners at all and call in the loan. After all, the original mortgage contract states that the borrowers have to pay a set amount of every month to keep the house or incur penalties and other charges if payments are missed or the house is foreclosed on. There is nothing in the loan documents that would allow the mortgage company to refuse to take the monthly payments any longer, except when the house is actually the subject of foreclosure proceedings.

It would also be difficult for the bank to prove to a court that they are entitled to anything besides the homeowners' monthly payments if they can make them on time and pay back any amount they have fallen behind. Just because they may have fallen behind in the past does not mean that the bank can just give up on the loan completely and stop accepting even on time payments -- as long as the homeowners made up the payments later on, the lender got everything it was due, plus a lot of accrued interest, late fees, court costs, and other charges.

In fact, if borrowers' houses are going into foreclosure or falling behind quite often, but they are able to pay back the arrears eventually, then these types of homeowners may be a great client from the bank's perspective. With all of the extra fees the lenders are charging to the loan when homeowners miss a payment, the effective interest rate may be much higher than the owners believe, which translates into higher profits on the frequently defaulted loan for the lender.

Of course, that might also be a good reason to try and keep up on the payments at all times, or just let one house go if it is not affordable. Selling or giving the bank a deed in lieu of foreclosure on one property might let the homeowners off the hook on one particular house, while allowing them to keep the other properties and make the payments a lot more consistently. It makes little sense to keep falling behind in mortgage payments just to keep one house out of foreclosure -- eventually, with all of the extra charges, it may just become too expensive to get back on top of a mortgage.

Instead of routinely falling behind on one mortgage and then falling behind on other bills to pay back the arrears on the house loan, it may be better for homeowners to find more permanent solutions that will help them stop foreclosure. Eventually, it will become too cost prohibitive to keep falling behind on the house loan, and the bank may take advantage of a sustained hardship to force a full foreclosure through the court system. For this reason, homeowners should consider better options and possibly finding solutions that will lower their bills so that they can keep at least one roof over their heads.

It is very common and quite easy for homeowners to become confused about various options to avoid foreclosure. With so many different methods available, it becomes difficult to keep the final goal of each straight. For example, homeowners may file bankruptcy to buy more time, but want to give their home back with a deed in lieu, but are also worried about being sued for a deficiency judgment afterwards.

There are a number of issues to this one group of methods to stop foreclosure. First the foreclosure lawsuit filed in the courts followed by the bankruptcy petition will have to be considered. Then the turning over of the house to the lender and the possibility of a deficiency judgment is an entirely separate aspect, although it will also relate to the bankruptcy filing and the dismissal of the case.

First of all, the foreclosure process that the bank initiated against the homeowners has been stopped by the bankruptcy filing, as long as it was a Chapter 13 bankruptcy and the mortgage was included. The foreclosure is stopped through the legal mechanism known as an "automatic stay," which puts any collection activities on hold while the courts consider the bankruptcy. Filing a Chapter 7 to liquidate debts, though, does not affect the status of the house loan or put the foreclosure on hold, since it is a secured loan and can not be discharged entirely through bankruptcy.

The automatic stay of any collection efforts in a Chapter 13, however, puts all foreclosure proceedings on hold until the bankruptcy is dismissed either by the homeowners or by the court. If the homeowners are able to complete the payment plan over 3-5 years, they will have paid back the arrears on the mortgage and reinstate the loan, and the lender will not be able to sue for foreclosure any longer. However, if the homeowners fall behind on the bankruptcy payments, the bank will most likely have the stay released and proceed with the foreclosure. At this point, the owners will not have the protection of bankruptcy to rely on to stop foreclosure again.

In terms of giving the house back to the bank through a deed in lieu of foreclosure, this can not be done while the house is still tied up in the bankruptcy courts. Homeowners can begin to negotiate a deed in lieu with the lender, but they will not be able to transfer ownership to the mortgage company without voluntarily dismissing the bankruptcy. For this reason, it is best to have the deed in lieu transfer fully negotiated with the lender before releasing the stay. Otherwise, if the deal falls through, the homeowners will not be able to go back into bankruptcy to protect themselves against the foreclosure.

For a bit of good news, once the deed is transferred back to the lender, there is no chance for a deficiency judgment against the homeowners. This is for a couple of reasons. First, the bank accepts the deed as payment in full of the mortgage loan, so there is no actual deficiency. The house is not auctioned off for less than the total amount owed -- the bank accepts ownership as payment in full instead of going through with the full foreclosure. Second, the deed in lieu is a direct transfer of the property with no real money involved -- there is no transaction where the bank could claim they are owed more money than they received from the deed transfer. Unless the homeowners agree to pay more (which they should not have to do), the bank has no real claim to anything extra.

When homeowners are trying to prevent foreclosure from taking their property, there may be numerous methods they will have to consider. Some of them will compliment each other, such as the deed in lieu precluding the possibility of a deficiency judgment, while others will counteract each other, such as the impossibility of transferring the house through a deed in lieu while in bankruptcy. Homeowners should try to research these related aspects of different solutions before taking the step of going through with any of them.

With the great number of real estate flippers and new investors that entered the housing market in the past years, many homeowners are finding out that their professional investing partner did not exhibit the highest ethical standards. When one partial owner finds out that a partner has been taking out loans simply to acquire money and then let the houses go into foreclosure, many issues of mortgage fraud and other criminal activities arise.

This type of activity may not be considered embezzlement, since, in many cases, both partial owners go in on a project together and one owner does not usually entrust his portion of the ownership of the house to the other owner. And since many investors purchased the properties for their own business activities, the two owners are not acting on any other person's behalf in their care of disposal of the property. Embezzlement is typically defined as when someone misappropriates assets that have been entrusted to them by another person.

However, this type of activity of taking out loans just to let the houses fall into foreclosure may be considered mortgage fraud, if one partial owner took out the mortgage without disclosing that he was only a partial owner of the property. Although the bank may have given a loan in such a situation, it would have required that both owners listed on the deed sign for the mortgage, because a partial owner usually can not agree to putting a new lien on the house without any other people having an ownership interest also agreeing to the new lien.

If every owner did sign for the mortgage, though, then it will probably be determined that there is not fraud going on between the owners, but there may be by both owners against the mortgage company itself. Taking out a loan just to take the money and let the collateral go into foreclosure is definitely not one of the options to select on a standard mortgage application for the purpose of the loan. But it would probably be the lending bank that could sue the homeowners for foreclosure or fraud -- not one owner against the other.

People who purchase a home and sign for a mortgage are assumed to understand why they are taking out a home loan in the first place. If a partial owner agrees to help take out a loan but did not understand what the loan would be used for or how it would be paid back, then it would be difficult to prove that this owner was actually defrauded of anything. Personal responsibility is still used in determining fault, in some cases, and no one should help another person take out a loan without knowing exactly what it will be used for and how it will be paid back.

Even receiving a house by gift or inheritance, where one owner takes out a mortgage just to steal money from a bank, may be dealt with in the same fashion. Owners who acquire title to a home should find out why another partial owner wants to take out a mortgage or refinance a house for cash out. If there is no real intent or ability to pay back the loan, then it may be assumed that the owners are simply trying to take the money and run. Unfortunately, the consequences of such actions usually come back to haunt the other owners, rather than the sociopath who defrauded the bank and took off with the money.

There is really no other way for homeowners to get out of foreclosure than to deal with the defaulted loan on their home. It is because they have a lien on their house and the property has been pledged as collateral for the mortgage that they face the loss of their home. In essence, all methods to avoid foreclosure involve eliminating the current lien. Homeowners have to pay off the mortgage or have the bank release this lien somehow for them to escape foreclosure. There are a few common ways to do this, and a few that are somewhat of an outside bet that the solution would ever work or not.

First of all, homeowners can just replace their current mortgage with another one through refinancing with a traditional or foreclosure lender. If they take out a loan with another mortgage company, the new loan will pay off the current lien on the house and the borrowers will have a fresh start with a new mortgage. The former bank will release its lien once it is paid off with the refinance loan. This is about the easiest way to pay off a mortgage to stop foreclosure, if the homeowners' credit is still good or they have significant equity in the property and can qualify to borrow.

Otherwise, the owners can try to sell the house on the open market or through a short sale. Selling means that the new buyers would have to pay off the current mortgage in order to own the house. Just transferring ownership of a property without paying off this lien does not work. Selling at a short sale would allow the owners to sell the house for less than the total amount due to the bank, and is used most often in foreclosure situations where the property value has fallen below the mortgage balance. Either type of sale would allow the foreclosure victims to have the lien paid off and released.

A deed in lieu of foreclosure would also work if selling or refinancing are not an option. This is where homeowners voluntarily give the deed to the property back to the bank in exchange for the lender not pursuing a foreclosure. The borrowers transfer the title into the lender's name, and the mortgage lien is then released. In effect, the homeowners are paying off the lien with the property itself and the bank can not go after them for any other payment, money, or additional assets. There is no danger of a deficiency judgment after giving the bank a deed in lieu.

These are the most common methods to stop foreclosure by eliminating the lien on the house before the legal process has been completed. A few other defensive legal tactics have been used recently, as well, that have resulted in the bank being unable to take the house through foreclosure, due to other circumstances. Some of these cases are not over yet, and the banks have simply been sent back to the drawing board to work on their evidence, but they are a positive sign for homeowners fighting back against predatory lending or gross misconduct by a bank.

In the first type of defense, a number of homeowners are beginning to challenge their foreclosure in court on the basis that the bank or servicing company suing them does not own the mortgage contract, and has no legal standing or right to sue for foreclosure. The company may be collecting the payments right now, but if they do not own the actual mortgage loan, they have no grounds on which to sue the homeowners. Such legal challenges have been successful in some cases because the banks chopped up and sold off many subprime and prime mortgages in the secondary market to hedge funds, pension funds, and other institutional investors, making it unclear who actually owns them.

Secondly, at least one case has resulted in the bank unable to pursue a foreclosure because it never loaned any money. Banks create the money out of thin air that homeowners borrow for the purchase of a house. This means that every single mortgage contract is essentially null and void, because the bank never put any consideration into the loan agreement. The money they "loaned" to the owners was created out of nothing -- they did not actually transfer any real assets that they own into the names of the owners.

Since consideration is an essential part of every contract, the fact that the bank did not put any consideration into the agreement meant that it lost the foreclosure lawsuit against a homeowner. The owners got to keep their property and the bank was unable to try and have the property auctioned off at a sheriff sale -- the jury decided that the bank never actually loaned any money and could not try to collect on the mortgage any further. This may turn out to be a serious blow to the entire banking industry, in which 99% of the money in the system was created out of nothing as loans to consumers or business owners.

Almost all solutions to foreclosure that do not involve working with the current mortgage company boil down to an effort to replace or eliminate the current lien on the house. Forbearance agreements, mortgage modification, and the legal payment plan of bankruptcy do not result in this type of transfer, but nearly every other method aims to pay off the current mortgage company's loan. Homeowners should keep this end goal in mind when examining various options to eliminate the problem, as saving their homes is always the end goal.

When a home is purchased by new owners, and they take out a mortgage, the bank that they borrow the money from takes an ownership interest in the property that is pledged as collateral. The document showing this interest is the mortgage or deed of trust, which details the terms of the mortgage, the lien on the house, and the amount originally borrowed. If the property owners fall behind, the lender will be able to take possession of the house through the foreclosure process.

The legal process of foreclosure, however, does not just automatically allow the mortgage holder to take possession and evict the owners right away. There are several stages to the legal action of taking back a property through foreclosure, and nearly all of the details of these stages are defined by the individual state foreclosure laws. In general, the foreclosure will allow the bank to regain the property since it is collateral for a now-defaulted mortgage loan, but the lender must follow specific steps.

The three most common stages of foreclosure are the pre-foreclosure stage, the lawsuit stage, and the sheriff sale of the property. When homeowners first begin to fall behind on their mortgage and are unable to get back on top within a month or two, the lender will put the loan into pre-foreclosure. In this step of the process, the lender will most likely be calling to collect or work out an arrangement, but the owners may not have recovered from their hardship yet. Interest and late fees are being added to the loan, however, which will make it more difficult to stop foreclosure later on.

In the second stage of taking a home back, the bank will file the foreclosure lawsuit or the Notice of Default with the county. Typically, the owners have a set period of time to answer the complaint and a hearing will be set at the local courthouse. Far too often, banks are able to get default judgments against homeowners who do not show up to contest the foreclosure or make an answer. This makes it very easy for lenders to proceed through this step of the process, although they may have acted improperly or even be engaging in predatory lending or mortgage fraud. But if the homeowners do not stand up for themselves at this point, the lender can score an easy victory in the courts.

The most common final step in the foreclosure process is when a house is auctioned off by the local government at a sheriff sale. Once the auction has been conducted, the new owner will get a sheriff's deed or other temporary proof of sale, which will allow them to take possession of the property once the sale has been confirmed. It is usually the original lender that purchases the house back, and once the confirmation of the auction, the eviction process begins. In most states, once the house is auctioned, the point of no return has been reached and the eviction of the homeowners is a foregone conclusion.

These are the three most common steps in the foreclosure process in most states. Some states, however, do not end the process after the public auction, and actually grant the owners more time to save the house during a redemption period. During this time, the bank can not begin evicting the people living there, and the family can use this time to find a solution to pay off the mortgage, sell the house, or just save up money to begin again after they move out. Not all states guarantee such a redemption period, though, so it is important that homeowners look up their state laws before planning their next move after foreclosure.

In order to put together any realistic plan to stop foreclosure, homeowners should have an understanding of how the process will work in their state and the time frames for each stage of foreclosure. The legal actions the bank takes must be in accordance with the laws of the state and the county rules; lenders and their attorneys often violate these rules numerous times, but it is up to the homeowners to defend themselves against such violations. Understanding the process will not guarantee they are able to save their homes, but it can mean the difference between having a plan of action and being caught completely unaware of important parts of foreclosure.

One common misconception that homeowners can have during a foreclosure situation is that they can somehow transfer ownership of a property and that this will stop the foreclosure in its tracks. Nothing could be further from the truth, however, and simply signing over the deed to the house to a third party will put the owners in a much more vulnerable situation than when their own names were on the title. Using a quitclaim deed or other transfer document will also do nothing to make the bank end its lawsuit to take the home.

Transferring ownership of a house in foreclosure does not relieve the original borrowers of their obligation and responsibility to pay the mortgage that is secured by the property. When they purchased the house, they promised to pay back to the bank a set amount of money at a certain interest rate, and transferring the deed will not change the fact that the house is collateral for the mortgage loan. The owners may be able to transfer ownership of the house at a later date, but their original promise to pay the bank or face the loss of the property will not be altered.

There is also a danger that transferring the title into another party's name will activate a part of the mortgage called the "Due on Sale" clause. This means that, if the homeowners transfer ownership at any time before they have paid off the mortgage in full, the entire remaining amount of the loan will be due immediately. Because most deed documents state the consideration paid for the property, banks view this as a sale of the house, even if it is only for a nominal amount like $10. Such transfers will activate the Due on Sale clause and the homeowners will still have to find a way to pay back the loan, or the house will be foreclosed and auctioned off.

It is also important that homeowners be aware of the fact that many foreclosure scam artists rely on such transfers in order to steal homes from desperate families. They sell foreclosure victims on being able to stop the process just by transferring ownership of the house to a third party, into a land trust, land grant, or other "creative" entity. At that point, the homeowners typically agree to paying the scammers rent to continue living in the house, all the while ignorant of the fact that the bank is continuing the foreclosure process and will evict them after the sheriff sale. The homeowners are eventually evicted with severely damaged credit, while the bank takes the house, and the scam company steals money and gets away with no damage to their own credit.

Transferring ownership of a house while facing foreclosure is almost never a good idea unless a sale or refinance of the property is also taking place. The defaulted mortgage must be paid off in full or at an agreed price in order for the foreclosure to be ended. If the homeowners are simply executing a quitclaim deed in a misguided effort to save the house from foreclosure, they will quickly realize that this does nothing to affect the original mortgage, and will only leave them in a potentially much worse situation.

If title is transferred out of the homeowners' names and the mortgage is not paid off, there is a good chance that the situation will go from bad to worse. They will no longer have control over the property, and the Due on Sale clause may push up the time frame in which they need to pay off the mortgage. In any event, though, homeowners need to keep their eyes open for potential scams and make sure they understand that transferring title does not stop foreclosure unless the defaulted mortgage is also paid off.

Once they have found a solution that allows them to save their house from foreclosure, many homeowners would like to delete any mention of the proceedings from their credit or property record. Because the foreclosure was cured and the mortgage either reinstated or paid off, they should be able to get it off of their histories, right? Wrong. Too often, the fact that a house went into foreclosure will haunt the homeowners long into the future.

On the credit record, having a string of late mortgage payments leading up to the foreclosure will severely damage the owners' scores. Being able to solve the problem before losing the house completely may not impact the history or score in a significant way, since the negative payment history is often not far enough removed in time. It will take a number of months to begin repairing the credit if the homeowners were able to save their home, and it may take years to qualify for a new loan if they lost the house to the foreclosure.

Getting the foreclosure removed from the credit report is also extremely difficult. It can be done, but it is unlikely and would take much work on the part of the property owners. In essence, to remove a foreclosed loan from the credit history, the debtors would have to persuade the mortgage company to request that the credit reporting agencies no longer show it on their records. Banks are often unwilling to do this, of course. Otherwise, there is usually no way to get a foreclosure removed in order to boost a credit score.

County records are even more difficult to remove once they have been recorded. Because the county keeps all documents that ever affected a particular property, they will not be willing to delete any foreclosure or other lawsuit court documents from appearing in relation to the house. Counties even keep foreclosure, deed history, and mortgages from previous owners going back decades, so that anyone can perform a title search through public records and verify ownership and liens.

The fact that the county is most often the keeper of all these historic documents means that homeowners who faced foreclosure, even if they were able to save their house, will always have those documents in their name in regards to the house. Their ability to stop foreclosure does not negate the fact that the documents were filed in the first place. On the positive side, however, is the fact that, once a house is taken out of foreclosure, those documents will also be recorded and anyone searching the property will be able to see that the owners prevented the loss of the home.

Public records and credit agencies often keep documents for far longer than homeowners would prefer, especially if they are constant reminders of a financial hardship and prevent the owners from qualifying for other loans that they are able to pay back. The credit agencies only keep foreclosure records for 7-10 years, while county records are kept virtually forever. It is possible, but unlikely to remove a foreclosure from a credit report, but essentially impossible to get the county to hide away those documents. After all, they are only providing a history of a particular property, and foreclosure can play a role in the history of a house.

When homeowners face foreclosure, the equity they thought they had in their house usually completely disappears by the end of the process. Especially if a house goes all the way through foreclosure and is sold at a public auction, there is more likely to be a deficiency than any profit from the sale. But even if the homeowners find a solution before that point, they can often find themselves quite dismayed at the evaporation of their home equity.

Equity in a home is destroyed during the foreclosure process by a series of circumstances. On the level of the individual house and mortgage, it can be erased by the bank's piling on of fees and charges, and by the desperation of homeowners to find a solution to the problem. On a larger social level, foreclosures in high numbers can lead to a general decline in property values in a real estate market.

When homeowners miss a mortgage payment, the bank will immediately begin charging as many extra fees as they can, many of which will accrue interest over time. All of these extra charges, if unpaid, will be counted against the homeowners' equity. Late fees, legal and court costs, and interest on unpaid balances can easily add more than $10,000 to the amount needed to pay off a loan, which has the effect of lowering the amount of equity people have in their homes.

Selling a house in foreclosure is also a difficult situation due to the lack of time homeowners may have to find a buyer and close the transaction. For this reason, they may be forced to give up much of their equity by lowering the asking price for the house to entice someone to purchase quickly. In the meantime, the bank will still be adding their own fees to the mortgage balance, which makes it even more difficult to get any profit from the sale.

The state of the housing market in the past year has deteriorated so that values are falling in general throughout the country due to higher than expected foreclosure rates and a lack of available credit. As property values fall, the equity in homes may completely disappear, with the homeowners going "underwater." This means that they have negative equity in their properties, owing more on the mortgage than the house is currently worth.

Thus, when foreclosure victims attempt to work out a solution and get ahold of their equity in a property, they may discover that much of it has disappeared. The longer it takes to resolve the foreclosure, the more charges the bank will add onto the balance, and the less time the owners will have to arrange a sale. As more homeowners face foreclosure throughout the country, property values will also fall further as more homes are placed on the market than can be purchased in a short period of time.

By the time a house goes to a public auction, it may be clear that the home is currently undesirable to most potential buyers. By this time the lender has added as many extra fees as it can, and the property will most likely be auctioned off for less than the total amount owed on the loan. This leads to the property selling for less than what is owed and the homeowners having a deficiency. Banks in some states can then try and sue the owners to get a judgment for this amount, although this is somewhat rare.

In the rare event that a house sells for more than what is owed on it, then the owners have a right to these profits. This is their return from the sale of the house, and they can claim it with their local county. They must do this with the county, though, because the local government will often not inform the owners that they are entitled to their profits from the sale of the property. The longer the homeowners do not claim this, the more likely it will simply be taken by the state as unclaimed property. It is always in the best interests of the owners to find out how much their property sold for at the sheriff sale.

The negative effects on a home's equity during the foreclosure process often destroys most of the equity that homeowners once believed they had. This is one reason why it is so important to try and work out a solution as quickly as possible, to avoid many of the extra charges the bank will add to the balance of the loan. But even if a method to stop foreclosure can be worked out quickly, the larger problem of generally declining property values can also have severely damaging consequences on homeowners' equity positions.

If you are facing foreclosure, you will need as much help as you can find. Lenders and servicing companies will make things hard for you, and unless your a lawyer, you probably wont understand much of what's happening throughout the process. These questions and answers are meant to help you understand more of what's happening, but we always recommend seeking professional help to help you successfully stop foreclosure.

One of the most frustrating experiences homeowners can have is dealing with a mortgage company who seems to make numerous mistakes. Especially if the homeowners fall behind on the mortgage or start making partial payments, the mistakes may seem to increase in number and severity. This may be due to the bureaucratic inefficiency of lenders, but they may also indicate a far more serious problem.

The first question homeowners should ask once they suspect foul play from a bank is if they are dealing with a mortgage servicing company, rather than a direct lending institution. This may help explain why homeowners would be getting letters demanding payment from a different company than the one they originally thought was handling the mortgage. Mortgage companies sell loans back and forth to each other all of the time, and they will transfer the rights to collect the payments to a servicing company.

Mortgage servicing companies are notorious for making mistakes, not having payments right, not crediting payments to accounts, and charging or forcing other expenses on homeowners to push them into foreclosure. This is termed "mortgage servicing fraud," and is quite common in the mortgage industry. These lenders may just wait for an opportunity to go after a particular loan, and homeowners in financial hardships may give them one by sending in a partial payment, which the company will now use as an excuse to begin moving towards foreclosure.

Homeowners in any situation need to be careful with any partial payments, though, as the amount not paid will continue to accrue interest until they pay it back. The owners' monthly payments may not be enough to cover the entire amount that they owe once the bank adds in the interest from the partially-missed payment. Over time, this will ensure that the homeowners fall behind on their mortgages even if they think they have made up all of the payments -- they never made up the interest on the missed portion, which continues to build up and pushes the owners further and further behind.

Alternatively, the bank may just put the homeowners' partial payment on hold completely. They have it in their offices, they may even have cashed the check, but they are not crediting the account with the payment. Mortgage companies do not like accepting partial payments, since it decreases their ability to foreclose on a house. These lenders would rather consider a partial payment as having missed a payment entirely and not credit it to the account until the homeowners make up the missed part. In the meantime, interest and late fees will begin to add up.

Of course, if the mortgage company is already threatening to foreclose on the house because of one partially missed payment, the homeowners may suspect foul play and a hasty move towards taking the home. The fact that they are threatening foreclosure so quickly should indicate to homeowners that the bank is considering them to be behind on the loan. The house probably is not in the actual legal foreclosure process yet, but the bank is having their collections agents call and threaten the clients to scare them into paying back all of the missed payments plus related junk fees, as if threats would help at all.

Sending in a partial payment is always a somewhat tricky situation for homeowners, whether they are experiencing a financial hardship or simply had trouble for one month. Banks do not like partial payments, and unethical servicing companies may use them as an excuse to start adding in as many fees as they can and pushing the house towards a foreclosure lawsuit. Probably the best idea for homeowners who can not make a complete payment is to call their lender and find out their policy on partials and whether the payment will be segregated until the rest comes in or whether it will be applied to the account, as well as what other fees need to be paid back.

Homeowners who decide to leave their home when facing foreclosure are faced with a difficult set of choices to make. Although their monthly mortgage payment may have gone up substantially or even doubled due to an adjustable rate loan, an expensive housing payment can seem like quite a deal to some of the alternatives.

Obviously, becoming homeless or living in the car is the least desirable option for most families losing their home; thankfully it is also the least common result. Although a tragic number of homeowners will have nowhere else to go, many will end up with friends or family, living in hotels, or moving their personal items, and sometimes themselves, into storage containers. For these newly homeless families, communities can come together to provide assistance.

But each of the alternatives to finding a way to stop foreclosure provides more difficulties than they solve, in most cases. Families are hurting all over the country right now, with rising food and gas prices, not to mention ever more people seeing their mortgage payments increase. Taking in another person who has lost a home can create a significant drag on a household's budget, especially if the foreclosure was caused by a permanent loss of income or medical disability.

But living in hotels while a long-term solution to foreclosure is sought is also a poor choice. Homeowners who have difficulty affording their mortgage will find it nearly impossible to keep up with the daily room rate of many hotels, which have been increasing prices along with the rest of the economy. Rooms in brand name hotels can now cost $120-$200 a night, depending on the area. Furthermore, it is impossible to maintain a normal life while living in hotels, with housekeeping every morning and daily checkout times to interfere with the functions of everyday life.

There have been recent stories of people who lost a home to foreclosure moving many of their large personal items into storage units. A small number of families have also moved in right along with their furniture, appliances, and other belongings, creating makeshift homes. While this may present a short-term solution for people with nowhere else to go, missing a payment for the monthly storage unit rental will result in the family's items being auctioned off.

Unfortunately, it seems as if most of the options for homeowners after foreclosure are somewhat poor alternatives to living in a home or apartment. The larger than usual foreclosure rates are pushing more people into apartments, which are helping push up monthly lease payments. This is another factor to be weighed when deciding to leave a home in foreclosure, as the cost of a rental may not be substantially lower than paying the mortgage, even considering an ARM increase.

Obviously, it is too bad that every homeowner does not utilize all of their options to stop foreclosure, or they have experienced such a destructive financial hardship that there is no choice but to leave the house or face eviction. As the demand for alternatives to houses increases, so will the prices for these alternatives, despite recession. In fact, the current downturn in the economy and the actions of the government and the Federal Reserve have all but guaranteed this will be an inflationary recession, with rising prices regardless of lower or higher demand.

Homeowners, therefore, need to consider attempting every solution available to them to save their homes. Even if they are sure they can not stay in the house for the long term, they should bargain with the bank for more time to move out and save up money to cover future housing costs. Banks are often willing to cut homeowners some slack if they are pursuing alternatives to foreclosure, and families may come across some solution that will allow them to avoid eviction. Giving up too soon is a mistake, and the alternatives to paying an expensive mortgage may be even more expensive and result in further loss of life and property.

When homeowners are attempting to put together some plan to save their homes, one of the key pieces of information they need to gather is how much they owe the bank in total. Without knowing this figure, it will be impossible to refinance the house, sell for a reasonable price and not owe anything later on, or even put together a short sale with an investor.

The best way for homeowners to get a payoff figure is to request the figure specifically from the lender or its attorneys. That will give them the most updated information on how much is currently needed to satisfy the mortgage in full and stop foreclosure. Payoff statements usually have a "good through" date of up to thirty days on them, and an estimated "per diem" interest charge for every day after the payoff expires.

In addition to requesting a payoff statement from the mortgage company, there are a few other ways for owners to get a rough idea about how much the bank is asking for, but these will not be as accurate. Out of date payoff statements, monthly mortgage balance statements, and public records searches can be useful tools to provide estimates if the lender is not being responsive to requests for updated payoffs.

Out of date payoff figures can give homeowners a very good idea of how much the bank will be looking for in the future to pay off the mortgage, but even a per diem interest charge will leave out other potential future charges. Attorneys fees may increase, or the bank may add a property tax payment of several thousand dollars to the total payoff, which may drastically increase the amount needed to stop foreclosure by paying the loan in full. If the statement is not too far out of date, though, it may be a good estimate of the current due.

Many homeowners still receive a bill every month from their mortgage company that indicates the total amount due on the loan. Usually this is just a balance of the total amount of principal left to pay off and does not include late fees, interest charges on late payments, and the attorney and court costs involved in the foreclosure process. A monthly balance statement should probably never be relied on for any actual payoff numbers, but they are useful resources for bank contact numbers which can be used to get a more accurate payoff, if nothing else.

One final way to get an estimate of the total amount owed on a mortgage is to search the public records in the county in which the property is located. Usually, the history of the mortgages/deeds of trust will be available online (or the owners or any other interested party can just call the county recorder and request the information), which will tell them when the homeowners got each mortgage and how much it was originally for. Again, this will not include changes from the time the mortgage was issued, including the charges listed in the previous paragraph and any payments the homeowners made on the loan.

Searching the title will also give homeowners, real estate agents, mortgage brokers, or potential investors a good idea if there are more liens than just the first mortgage. The bank may be willing to take less on a short sale, for example, but if the owners or investors have to come up with more money to pay property taxes, and more to pay off a second mortgage, and more to pay IRS liens, and more to pay utilities liens, then there is a strong possibility they will not end up with a very good deal that will stop foreclosure. Of course, investors could negotiate down these liens as well, but that's more time spent dealing with lenders who may not cooperate in the end.

In any event, if the bank is still able to provide payoff statements on a mortgage, that means the homeowners are still living in the house and it has not been sold at the sheriff sale yet. The best bet for anyone interested in helping foreclosure victims or buying foreclosed houses may be simply to ask the current owners to request a payoff from their mortgage company. They can give anyone they like a copy and any parties interested in working with homeowners will have the information they need to make an offer or work on paying off the loan and ending the foreclosure.

As more people fall behind on their mortgages and see their home's value decrease to less than what they owe the bank, some homeowners are simply mailing in the keys to the house. Instead of the mortgage payment, they are giving the property back to the bank and walking away, allowing the house to go into foreclosure.

This action of sending in they keys to the house in lieu of the mortgage payment has been termed "jingle mail." Both homeowners in trouble or who do not want to overpay for their house as well as investment banks are increasingly turning to jingle mail to relieve themselves of large debt burdens.

There has been a lot of judgment and negativity directed at homeowners to do this, as people who were not taken in by the housing bubble see jingle mail as the latest indication that people do not take enough responsibility for their own financial decisions. Homeowners who bought at the top of the market hoping the market would go even higher, and are now sending in they keys because they do not want to pay for their gambling losses are obviously taking advantage of the situation.

But homeowners who send in the keys to their homes will face serious consequences long after the house has been foreclosed on. There is little chance they will be able to participate in the real estate market at all for a few years, except as a renter, and their credit will be scarred for nearly a decade.

Investment banks have also been engaging in jingle mail, a form more subtle than homeowners but also more costly. The Federal Reserve is allowing banks to use as collateral toxic mortgage debt in return for loans, which is allowing the entire banking system to get these bad loans off of their books and keep up an appearance of solvency.

Banking jingle mail is far more serious to the general public than the homeowner who sends in the keys to the house. In that instance, the previous owner has to face the effects of foreclosure and give up the real estate asset, while banks will be able to foreclose on the house and resell the property in the open market.

When banks send in nonperforming mortgages to the Fed in return for Treasury securities and loans, they are building up an edifice of financial fraud and sticking the general public with their bad mortgage debts. Inflation of the money supply leading to higher food and energy prices is one result, combined with the collapse of the dollar are foreign countries lose confidence in a currency backed by nonperforming real estate loans.

Homeowners who give up on their homes and send in the keys hurt only themselves and the lenders directly. The owners will lose the house and not be able to obtain affordable credit for years, while the banks will lose money on the interest they were expecting to collect from the mortgage payments. The general public is hurt indirectly in the form of higher mortgage rates and stricter lending guidelines.

But when banks engage in jingle mail actions with the Federal Reserve and hide the effects of their moral hazard, the general public is hurt more directly. Prices for all other goods and services, not just the cost to borrow money, rise as the money supply is inflated, while bankrupt financial institutions are allowed to continue robbing creditors and taxpayers.

Homeowners who no longer want to pay more for a house than it is worth reflects badly on the irresponsibility of the American people who are the greatest debtors the world has ever seen. But large financial institutions sending in jingle mail and sticking the American people with the bill is an even poorer reflection on the criminality, corruption, and economic manipulation of corporations.

One of the predictable consequences of the collapse of the housing bubble and the foreclosure crisis is that property values are declining in many areas of the United States. As subprime loans go into foreclosure, more homes are listed on the market, driving prices down, and erasing equity that homeowners thought they had.

When this happens on a large scale in areas that were inflated by the era of easy credit, homeowners may find that they owe tens or hundreds of thousands of dollars more on their homes than they are worth. Nobody wants to pay more for an item, be it a house, car, or pair of pants, than it is worth, and the temptation just to walk away from these homes is growing.

But it seems that few homeowners realize that they were always going to have to pay far more for their house than it was worth, and paying anything could be considered too much based on how much they actually borrowed. First of all, a mortgage loan consists of a smaller portion of principal and a much larger interest charge; and second, the bank does not actually lend out any money that is not created out of thin air.

For example, consider a house that is purchased for $150,000 at 6% interest with a 30-year, fixed rate loan. Homeowners may feel like they have paid $150,000 for the house, but this is just the principal -- on top of the original $150,000, they will have to pay over $173,000 just in interest to the bank, with a total P+I cost of nearly $323,000.

With homes of higher values, the interest portion of the debt climbs even higher. On a home bought for $450,000 with the same terms as in the previous example, the homeowners will pay over $521,000 in interest, increasing the cost of their $450,000 home to nearly $1 million.

Thus, when a home declines in value, it is somewhat illogical for homeowners to consider abandoning the house on just that basis alone. They may feel like they are paying "more than what it is worth," but they had already planned to do this when they took on the mortgage loan and agreed to pay interest to the bank. Falling property values will not alter their bad deal, except make it slightly worse.

A decline of $100,000 on a $450,000 house is not a huge cause for alarm when the total outlay of money for the property will be close to $1 million. Homeowners should ask themselves as soon as they apply for a mortgage whether they want to spend that much on a house worth less than half that amount, which will most likely never appreciate to value the bank is charging for the home.

There may be many reasons to give up on a property, and currently declining values may factor into the consideration to walk away. However, homeowners should not consider lost equity as their main consideration in abandoning a house; after all, their mortgage supposedly binds them to pay two to three times as much for the house as it is worth -- losing a few ten thousand in value right now will not alter that in the least.

Suburban sprawl, increasing expenses for transportation, financial hardships, and rising crime due to the foreclosure crisis can be considered much more important reasons for homeowners to leave an area and let their home go into foreclosure. Feeling that they are "paying too much" for their house is not a good excuse, as they have agreed to pay too much just by applying for a mortgage when purchasing their home.

Two common mistakes that homeowners can make while facing foreclosure are to abandon their home before the appropriate time, and transferring ownership of their property in the belief that it will somehow help their credit. Unfortunately, performing either of these acts may cause the bank to proceed with foreclosure even more quickly. Also, the homeowners will lose some of their power over the resources they have to save their house.

In the case of moving out of a foreclosed property before the entire process is complete, the homeowners run the risk of leaving the house in an abandoned state. If the bank finds out that the property has been left empty, then they may try to ask the county courts to have the sheriff change the locks. This could make it very difficult for the owners to regain entry, so they should take care that the house looks lived in and is being maintained and visited often. The lender will send someone (possibly a local Realtor or appraiser) to drive past the house from time to time to see if it is being damaged or left vacant and will try to secure the property if it is apparent no one is living there.

A second mistake, possibly more damaging than leaving the house, is for homeowners to transfer title to their home to a friend, family member, or third party. Many of the common foreclosure scams involve signing over the deed or otherwise executing a quitclaim deed to the house. Although they may be told that this will prevent the foreclosure from showing up on their credit, this is not the case at all. People in foreclosure can not transfer title to get the foreclosure off of their credit. In fact, the foreclosure has little, if anything, to do with who is on the title. It has everything to do with whose name is on the mortgage loan. Homeowners fall behind on payments for the mortgage, which does not have anything to do with who is on the title.

Transferring ownership will only reduce the homeowners' options to stop foreclosure, and may even trigger a "Due on Sale" clause in the mortgage contract. This might cause the bank to consider the transfer a sale of the property, and they will demand payment in full of the mortgage. If the house is already in foreclosure, they may try and accelerate the foreclosure process if the owners can not pay the entire amount of the loan. Signing over the deed to the house is almost always a bad idea when homeowners need to find a way to save their home.

Instead of relying on these false perceptions of leaving a house to avoid being kicked out or transferring title to preserve credit, homeowners should take more effective steps to prevent foreclosure. Their next step should be to find out some way of either paying back the amounts they have fallen behind on the loan, or working out a repayment plan with the bank, or disposing of the property. If they can save extra money every month and the bank is willing to work out a program, then they can probably get back on top of the payments, with a little financial discipline.

If they do not want to save the house, or it would cost more than they can afford to set up a forbearance agreement, then they can try to sell, or work out a short sale, or give a deed in lieu of foreclosure. Bankruptcy may be another option if they are running out of time and need to stop a sheriff sale, but it is always a good idea to talk to an attorney about filing Chapter 7 or 13, as well as other legal options to stop the bank from taking the home. But there are always more solutions available than homeowners are aware of, and banks will usually not inform them of all of their options to save the house.

One of the most difficult aspects of facing foreclosure is simply that there are so many false perceptions and bad ideas floating around as traps for homeowners to fall into. Leaving the house prematurely or transferring their ownership interest into someone else's hands may cause more problems than they solve, and actually make the foreclosure more difficult to stop. It is far wiser for people facing foreclosure to work on productive solutions and make sure they are receiving the most accurate foreclosure advice possible.

For one reason or another, many homeowners do not seem to be aware that their lender has filed the foreclosure lawsuit against them in county court. Although all plaintiffs are required to give notice of the lawsuit to the defendant, foreclosure victims seem to be in the dark more often than not, finding out about the sheriff sale at the last minute or after the fact when they are in danger of being evicted.

This may be due to simple incompetence on the part of the bank, or their attorneys refusing to follow the law procedures. Homeowners themselves may also ignore certified mail or never receive a copy of the lawsuit paperwork. But if homeowners know that they are behind and are worried about being foreclosed on, there are numerous other sources of information to find out about the foreclosure lawsuit.

Many times, homeowners will receive collection letters from the bank's trustee or local attorneys demanding that they repay or face foreclosure. There should be detailed contact information listed on these letters they send out, especially since these parties are ostensibly attempting to assist the homeowners stop foreclosure before the lawsuit proceeds. It may have the trustee's name or the contract information of the attorneys who are involved in the foreclosure lawsuit.

Homeowners can call either of these parties to find out more information about any pending foreclosure actions or if there is an auction scheduled for the property. If the trustee or attorneys do not have any information about a lawsuit against a particular house, it is likely that the foreclosure process is not being pursued currently on this particular property.

Alternatively, foreclosure victims can call their county courthouse to find out if a foreclosure lawsuit has been filed against them. The house could not be sold at a county auction if there was no lawsuit and judgment against the property. The bank simply would not be able to ask the county to auction the house without having gone through the actual legal process of taking a home through foreclosure.

As one last option, homeowners can call the county sheriffs department to find out if their house is listed for an upcoming foreclosure auction. If so, then this would indicate that the homeowners may not have been properly served with the foreclosure lawsuit. But if there is no auction scheduled, then there is probably little danger of the house being sold out from under the owners.

Foreclosing banks always make mistakes, and they hardly ever call their clients back to say that they have corrected those mistakes. Apologies in the banking world are few and far between. It would not be surprising for a bank to find out that the foreclosure process should not have been started against a house, or that notice was improperly given, but they will just ignore the situation, hoping that the homeowners do not figure out that they have been illegally targeted for losing their home.

This is one reason why there are numerous other sources of the same information that homeowners should check with. It is important to remember that the bank can not auction a house without the help of their attorneys, the county courts, and the county sheriffs department. If the bank is being nonresponsive to requests for information regarding the foreclosure, these other parties may be more useful.

With the rising numbers of foreclosures and mortgages behind in payments, it seems as if the banks are falling behind on pursuing owners of these properties. Banks have always been likely to help homeowners by giving them more time to work out a solution, as long as the owners are in regular contact with the lender. But now, even homeowners who have gone all the way through foreclosure and should have been kicked out by now are remaining in their homes.

As the number of properties behind in mortgage payments has risen, the length of time it takes banks to begin the foreclosure process has also increased. From a time period of a little less than forty days to begin the process in 2005, lenders are now taking nearly seventy days to foreclose on a house. This would seem to indicate that homeowners are being given more time to find a solution to foreclosure, but it is more likely that the banks are simply falling further and further behind. There is also a reluctance to take back properties that have been devalued due to falling home values.

The result of this is a backlog with lenders and county governments of properties that are in some sort of housing crisis limbo, and a distortion of how many homes are actually in the various stages of foreclosure. There is a difference between a home being in default of payments and actually having the mortgage company begin the foreclosure process. With this process being delayed by the banks, the situation looks far better in the short term, but far more disturbing in the long run.

The homeowners, if they have not moved out of the home, may be able to keep living there far longer than they think. Even though state foreclosure law dictates the general time-frames for sheriff sale and eviction, banks that do not pursue these steps put the process on hold voluntarily. Even in homes that have been auctioned, the bank may be wary of taking possession of the house and incurring more costs to maintain the property. In this case, the sheriff may just never show up to evict the former owners.

As most homeowners are aware of, keeping up on the repairs and maintenance of the house is not inexpensive. Even if the mortgage is completely paid off, there is still a need to pay insurance and property taxes, in addition to any other housing expenses. When banks own homes, they have the same expenses, and may need to pay for repairs if the foreclosed homes are damaged or ransacked by vandals. It is easier and cheaper to let the owners keep living in the property, even if they are not attempting to stop foreclosure in any meaningful way.

Allowing homeowners to keep living in foreclosed properties also gives the local real estate market a false sense of lower inventories of properties for sale. Banks are able to keep home values higher by keeping these houses off of the market, as well as removing them as targets of theft or damage. Banks may have had very high loan amounts on these homes, and do not want to do even more to drag down the eventual price by offering many homes for sale at once.

Homeowners will not be able to live in properties mortgage free forever, but banks have apparently begun to realize how much more it will cost them to evict people and begin managing the homes. In response, although they may be taking the homes to auction or preparing to initiate foreclosure proceedings, the foreclosure victims are being allowed to remain until the market is ready to accept more properties listed for sale. Homeowners who are behind should have some exit strategy for leaving the home before they are evicted, but no news may be good news from foreclosing banks and indicate that they have more time than they think.

Since the meltdown in the real estate markets and the increasing foreclosure rates, several new websites have popped up offering free foreclosure help and marketing self-help packages and programs. Many of them do not describe much of the contents of their products, but similar ones have been around for years. They almost always consist of some sort of self-help package, with forms and instructions designed go guide homeowners along the path of avoiding foreclosure in several different methods.

For homeowners who want to try to stop foreclosure on their own, they can do a lot worse than buying a product that will guide them through some of the steps in the legal process. Several of these products also offer worksheets to help homeowners evaluate what options they may qualify for, as well as form letters that can be customized for a variety of purposes. These might include working with the mortgage company, explaining the foreclosure when applying for a new loan, or requesting the sheriff sale be postponed for a period of time.

Homeowners should not expect magic from any product or source of foreclosure help, though, unless they are willing to put in the hard work necessary to save their homes. Stopping foreclosure is not easy, it takes time, and the other parties in the process (banks, attorneys, courts, and so on) may not be entirely receptive. If the foreclosure victims pay for the self-help package, and then fail to follow the guides or instructions, there is a strong possibility they will lose the home, regardless of what products they have purchased. Unfortunately, when homeowners are unable to prevent foreclosure, they blame the product itself, rather than their efforts in putting it to its most effective uses.

Homeowners who are serious about saving their homes on their own could also probably find mostly similar documents that are used in the foreclosure help packages for free through various sources online, as well. Many websites now offer form letters, worksheets, and simple calculators to help foreclosure victims examine options that may be used to stop foreclosure. Of course, finding these tools online through many sources would extra take time to do the research, put together form letters and worksheets to match the situation, and would generally involve more work than just buying a kit, which has all of the information centrally located. But in either case, the homeowners will have to work with the information and their banks in order to make the most effective use of any program.

Many of these self-help packages are often relatively cheap, costing less than a few hundred dollars -- some even cost much less than $100, which causes some homeowners to suspect they will not be getting much for their money. But a low price does not necessarily mean the products are of low quality; instead, the relatively cheap price should indicate that working out the solutions to foreclosure will be entirely in the hands of the foreclosure victims, who will be solely responsible for putting in the work to save their homes. The owners do all of the work in negotiating with the bank or finding alternate sources of assistance, with minimal guidance from the providers of the information.

If they are expecting to have their hands held and for someone else to contact the mortgage company for them after paying for a self-help package, then they may be better off hiring a professional loss mitigation company or bankruptcy attorney. But if the homeowners really are willing to work on finding a solution on their own with the kit and some extra background information, then this solution can be very cost-effective in providing them with extra options to save the house.

Even after setting up a payment plan or modifying the terms of a loan to avoid foreclosure, some homeowners keep receiving post cards and letters from attorneys and other companies. These often include sales pitches threatening them with foreclosure, sheriff sale, and eviction, but offer various services to save the home. It may be quite confusing for homeowners as to why they keep receiving such letters, because they believe they have worked out a solution to foreclosure.

However, there are three main reasons why these letters may keep coming. Two of them are most likely not a big deal, but the third should give the foreclosure victims a strong reason to contact the courts or local sheriff's office for more assistance. More than likely, though, the reason for the continuing letters offering foreclosure services will be one of the first two, making their appearances relatively unimportant, although they may be somewhat irritating reminders of the foreclosure experience.

1. In most cases of foreclosure, working out a repayment plan does not actually end the foreclosure process -- it just puts it on hold until the owners pay back the amounts they have fallen behind. They are still behind in the mortgage and in foreclosure until the loan is completely reinstated. Of course, many workout solutions may take months to complete, so the owners will keep receiving mail for quite a while.

   The lender may be keeping their lawyers on retainer and not informed them that there is a solution that has been worked out and approved for the short term. Lawyers are also not very efficient and may just keep sending the foreclosure victims the same collection letters threatening foreclosure until the homeowners are completely paid back in the defaulted amount over the term of the workout plan.

2. The homeowners may be getting letters from foreclosure help companies and attorneys offering their services to help them save their home. In this case, these companies are not affiliated with the mortgage company or its attorneys, but are offering their own third-party assistance programs. Most of these companies get their property and homeowner information from public records, which may not be updated once the property is out of foreclosure.

   These foreclosure services companies would not know if the owners have put the process on hold with a forbearance agreement, so the owners will remain on their mailing lists. Thus, it should not be too surprising that they will receive mail offering foreclosure help for quite a while. This, however, does not actually affect any of the negotiations with the mortgage company.

3. The lender is lying to the homeowners, their house is scheduled for auction, and they are just keeping the owners' workout plan payments to get as much money as possible out of them before selling the house. In this case, the foreclosure victims should call the county courthouse or sheriff's department to find out if their house is scheduled for a county auction.

   But this possibility would be more easy to tell, because the bank and its own lawyers would send out information relating to the foreclosure lawsuit or sheriff sale. Other companies offering help would also send out information, but the lender itself would also be attempting to continue to collect and threaten the sale of the home at auction.

Homeowners in foreclosure are almost guaranteed to keep receiving mail long after they have found a solution to stop foreclosure. If the letters and postcards comes from the bank's lawyers, it may be due to the fact that the workout plan has only put the foreclosure process on hold. Mail from foreclosure assistance companies indicates there is a good chance their information gathered from public records data is out of date. But if the lender itself keeps threatening to auction the house and has set a date for it, the homeowners should get clarification of the true status of their home so that it is not sold out from under them while they are making payments on a plan they believed would save their home.

With foreclosures at historically high rates across the country, some homeowners feel that they have no other option to save their home other than taking out more loans. Some end up taking out payday advance loans, which is almost universally a bad idea for people facing a financial hardship or foreclosure. A growing use of these loans will delay any recovery in the economy, rather than stimulate growth.

Once homeowners take out a payday loan to make the mortgage, they can quickly fall into a cycle of not having enough money to pay back one or the other, and then not having enough money to pay back either loan. Even if the loan is only a few hundred dollars, interest rates can be several hundred percent, and the term of the loan is usually very short. Homeowners may not want to put themselves in a position where they only have two weeks to pay repay a loan with an annual 800% interest cost.

However, the rise of this kind of loan is coinciding with the decline in lending by traditional sources. Banks are experiencing their own credit crisis, and homeowners who bought or refinanced a home within the past few years may not have enough equity for a foreclosure refinance or other solution. Thus, increasingly desperate homeowners in danger of foreclosure are turning to the cash advance and payday loan outlets, instead of attempting to work with a bank that is no longer responsive to their credit needs.

What should not surprise too many people, though, is that the banks also have ownership interests in these payday loan providers. Traditional lenders may not own them outright, but they do profit when homeowners take out short-term loans with astronomical interest rates in order to pay back their long-term mortgages with lower (but increasing) rates. Banks profit from making bad loans to people who can not afford the loan, and then make even more money when these mortgages go into default and the homeowners turn to payday loans to stay afloat.

The homeowners then may end up with both their foreclosing bank and the payday loan outlet aggressively attempting to collect on these loans. Even if they are able to find a way to stop foreclosure on the house, the cash advance loan may push them into danger of bankruptcy, collections, or further judgments and lawsuits. We have received emails from homeowners in exactly this situation, who first had taken out numerous payday loans in order to pay the mortgage, but ended up having to take out more of them just to pay back the previous ones. This may go on for several years before their savings are completely wiped out and they can no longer keep on top of their finances.

The propensity of people who are unable to manage their finances, with or without a hardship, and the increase in reliance on payday loans will only make the foreclosure crisis worse. It is no wonder banks are unwilling to work with homeowners to stop foreclosure, though, as they will make money when these families take out cash advances on their paychecks in order to pay the mortgage. Homeowners who have been taken advantage of in their mortgage loan should be extremely cautious of being taken for another scam through feeling as if they have no other choice than to take out a payday loan.

Although the entire experience of facing foreclosure is just one challenge after another, homeowners and potential sources of help should be aware of some of the more common problems homeowners face. The list below is definitely not exhaustive, but it highlights some issues that everyone facing foreclosure should take care to avoid or overcome. Running into any problem should not be a reason to give up the fight to save a home.

1. Homeowners who wait too long to call the lender. This is probably the most common problem when trying to stop foreclosure, but it is also the easiest one to prevent.
2. Lenders who do not return phone calls asking for help. They have no problem calling homeowners all day at home and work to demand payment of the mortgage, but getting the loss mitigation department to return a call can be a very trying experience -- for individual homeowners and professional companies.
3. Lenders who do not acknowledge receiving faxes/paperwork from homeowners to apply for a workout solution. This is related to problem number two, but getting through to a customer service representative does not guarantee that the homeowners have taken any meaningful step towards saving their home yet.
4. Too little equity in the home to qualify for a new foreclosure loan. This is especially a problem now with real estate prices declining nationwide, but some banks are beginning to accept short payoffs on refinances.
5. Homeowners do not have stable or enough income anymore to get the mortgage back on track or qualify for a repayment plan. The lender will not approve a workout solution unless the homeowners' income situation has stabilized and can support a higher payment for a short time.
6. The lender will not accept a short sale, and the homeowners owe more than their home is worth. This problem can be especially distressing since it effectively eliminates the option of selling the house to stop foreclosure, but homeowners may be able to persuade the bank to reconsider, based on recent comparable sales and a signed purchase contract from a buyer.
7. The homeowners have filed bankruptcy in the past and can not do it again to stop the sheriff sale in time. Although the sheriff sale can be postponed other ways, having the option of filing bankruptcy as a last resort can often persuade the bank to put off the auction voluntarily in order to give the homeowners another chance to save the house.
8. Homeowners are unaware of any programs that could help them, so they abandon the house rather than seek out assistance that they do not know exists. With more media coverage of various programs offered by the banks and government, hopefully this problem will become less severe. But knowing that there are options to stop foreclosure is almost half the battle and will prevent homeowners from giving up too quickly.
9. The homeowners have a potential buyer for the home, but there is not enough time to close the sale, and the bank is unwilling to postpone the foreclosure auction. Usually, the bank can be persuaded to put a hold on the sale, or the homeowners may be able to petition the court for an automatic stay of the auction. This is not an insurmountable problem in the foreclosure process.
10. Poor credit scores caused by late mortgage payments make getting a personal loan to pay off the arrears impossible. Although getting more credit to pay off previous late credit is not recommended, homeowners should have every option available to them for reasonable access to borrowing money. Ending up at a payday loan shark is almost ever a good part of the plan to save a home from foreclosure.

These are some of the ones that homeowners in foreclosure may run into pretty frequently. Of course, there are many more challenges than just the ones briefly examined here, but many of them will be unique to certain situations. The ones listed here can be pretty common, as frustrating as that is, but none of them guarantee that the homeowners will lose the home. Every problem during foreclosure can be overcome.

The questions that homeowners in foreclosure have are nearly endless. What are the consequences of going into foreclosure? Should homeowners be worried about being sued after they lose a home? If so, would it be better to file bankruptcy before the bank can sue for a deficiency judgment, or after? And what about their credit after facing foreclosure -- how long will it be scarred and what does that really mean? Thankfully, many homeowners will have similar experiences and the answers to these and other questions may be found relatively easily.

First of all, there is almost zero chance the mortgage company come after their former clients for the deficiency after the house is sold at the sheriff sale. Mainly for practical reasons, banks hardly ever do this, because it will cost them more time and money to sue homeowners after the foreclosure has ended. Furthermore, the foreclosure victims did not pay back the bank on the mortgage or the foreclosure judgment, so the lenders have little reason to expect that previous homeowners would ever pay back a deficiency judgment for tens of thousands of dollars relating to a house that they no longer own. It makes more sense from the bank's perspective to spend their resources trying to sell the house on the market, rather than pursuing more credit.

Therefore, if homeowners are considering bankruptcy in order to clear up their credit in anticipation of a deficiency judgment, they may want to hold off on filing right away. The chance the bank will sue them after the foreclosure for a deficiency is not very likely. But if the mortgage company does decide to sue them (which would be a huge shock to me), then the foreclosure victims may be able to have the debt discharged through bankruptcy.

But in the short term, the most relevant reason to file bankruptcy to stop foreclosure is to avoid having the home sold at a sheriff sale. Bankruptcy will put the entire foreclosure process on hold, which may give the owners the time necessary to sell the house or use the legal payment plan to get their defaulted mortgage back on track. Using the law in self defense to avoid losing a house to an aggressive bank is a quite acceptable reason to file bankruptcy, if there are no other options to stop foreclosure that can be closed before the auction date.

In terms of the credit situation after the home has been saved or lost, in the short term the homeowners will not be able to get any new credit at a decent rate -- not for at least a couple of years. This is mostly due to the large number of late mortgage payments that typically lead up to the foreclosure lawsuit. So homeowners who have just gotten out of foreclosure or bankruptcy should take this opportunity to pay down the debt they already have and start a savings plan. Then in 2-3 years, their credit may be good enough and the foreclosure far enough away that they can obtain new credit lines, refinance an existing loan, and borrow money at competitive rates of interest.

In terms of being able to qualify for a new mortgage or large loan after foreclosure, the owners' savings and down payment will be much more important than just their credit score. Banks will overlook the poor credit caused by the foreclosure if the loan applicants are putting a good amount of money into whatever asset (car, new home, etc.) that they are trying to get a loan for. This reduces the risk that the bank assumes, since they will be loaning less than the asset is worth and it shows that the homeowners are also financially invested in paying back the loan on time.

A few years of poor credit may just give homeowners the breathing room to pay off their credit card, personal loan, or medical bill debt. Not being able to borrow and saving helps homeowners escape from the credit trap and keep out of debt slavery. And if they can save money, then they will have more resources to use as a down payment or emergency fund to show new lenders that they are financially responsible enough for a new mortgage or other loan.

Foreclosure, although it is a depressing, devastating financial situation to be in, is not the end of the world. Neither is collections, repossession, bankruptcy, or judgments. The most difficult aspect is just not knowing what will happen next and what risks are involved in the foreclosure process. This is why most homeowners have more questions than answers when trying to save their homes. But even the answers to many of these questions are not difficult and should give some hope in even the most difficult foreclosure situation.

Especially in the case of homeowners who own multiple properties, they may find that their mortgage company has had the locks changed on a house in foreclosure. This can be very unsettling to owners who are still trying to find a workable solution to foreclosure, because it indicates that the bank is exercising control over the property before it has been sold out from under the owners at a county auction. But banks may have the locks changed on a house even though they are not the legal owners of the property.

Of course, they can not really just take the property away before the foreclosure has gone through and the house has been sold at a sheriff sale. Without a reason to request that the house be secured, the bank can do nothing to the property itself until after the foreclosure auction. However, they can request the court to secure the property temporarily, which might mean changing the locks on an apparently-abandoned house.

Especially if the homeowners have not responded to any of the bank's motions in court or filed an answer to the foreclosure lawsuit or appeared (on their own or through an attorney) at the scheduled foreclosure hearing, the bank may just assume that they have decided to walk away from the house. Even if they know that the house is a vacation or investment property, they will not want to see it sitting empty and a potential target of vandalism or damage.

The government courts and sheriffs department will usually do whatever the banks tell them to do, so that helps explain why a house may be locked up before the foreclosure auction. The mortgage company can usually show that the owners have not responded to the lawsuit and that the house has not been occupied for a certain number of weeks or months, and that it should be secured to prevent damage. The courts will usually accept this argument and order the sheriff to change the locks.

But once this happens, it can be extremely difficult for the homeowners to regain access to their home. This is why they should keep in contact with the lender throughout the foreclosure process so they can explain why the house will be empty. But preventing the county government from changing the locks will always be much easier than cutting through all of the red tape later on to get back into the house. After the government changes the locks, even if the homeowners try to break into their own home, they may be held liable for any damage.

Once the locks have been changed and the homeowners are shut out of the house, but before the foreclosure auction has been conducted, they can try to get access back to the house by calling the local sheriff's department or the courts. They will most likely have to inform the court that they are still in possession of the house even though it is not their primary residence and may be empty at times. Even this simple act of explanation may require filing paperwork in the court and having the government remove the locks that were changed or allowing the legal owners access to their own property.

But the house is still the private property of the owners until it is sold at the county foreclosure auction. The mortgage company can and usually will secure the home if it looks like the homeowners have abandoned a property in foreclosure. However, they can not not otherwise interfere with the foreclosure victims' ownership interest until that interest is transferred by the applicable laws. The government may act as the right arm of the banks in securing the property and keeping the homeowners out for as long as possible, so keeping the house from being taken over by the government, even temporarily, should be a high priority for homeowners who are attempting to stop foreclosure on their homes.

Some homeowners facing foreclosure find a solution and are able to save their homes. Some of them just give up on the house and find somewhere else to live until their financial condition has repaired and they can attempt qualifying for a new mortgage. This post is not about either of these groups of homeowners, though. This post is about the ones who neither find a way to avoid foreclosure nor leave their home, remaining in the property and living rent and mortgage free for as long as possible.

With such high foreclosure rates across the country, it should not be surprising at all that some homeowners are taking advantage of the backlog in county courts. The Big Picture showcases an article about such homeowners living in multi-million dollar homes who have not made a payment for nearly two years while their houses are listed on the market and in foreclosure.

This phenomena is not all that surprising, as we have always run across homeowners who are looking for foreclosure advice only so that they know how long they can stay in the house. Some of them have already planned where they will go once the house is scheduled for eviction, but they want to continue living in the foreclosed house for free until the last second.

It seems it is usually the owners of higher-valued property that engage in this activity, as well. These are not the owners of an $80,000 house that try to stay for as long as possible; they move out quickly to avoid being taken by surprise by the sheriff who has come to remove them. Property owners whose houses are worth several hundred thousand or more were most often the people who contacted us to learn about the foreclosure process and how long they would be able to live mortgage free.

The homeowners may have their plans to live without the worry of a mortgage payment for as long as possible, but the mortgage companies are seemingly at a loss as to how to deal with these properties. The article suggests that these may be properties whose losses have not even been declared by the banks yet. Further compounding the problem for the banks is that they are waiting more than half a year in some states and counties just to get a court date to have a foreclosure lawsuit heard by a judge.

Of course, this just leaves the opportunity open for homeowners to contest the lawsuit or request more information that they are due under the various laws regarding debt. Especially if the loan has been sold numerous times and there is some question about ownership of the mortgage, the case may be extended for several more months before the house is ordered to be sold at sheriff sale. Over the last decade, mortgage debt, subprime or not, has seen a large increase in how it is bundled, securitized, and sold off to investors. A bank that collects the payments may not own the actual loan, and homeowners should not assume that their mortgage company has any grounds to sue them for foreclosure.

I have written before about when homeowners should consider walking away from their home and some of the considerations when doing so. Most of the rest of this blog provides information on how foreclosure victims can save a home through various methods to stop foreclosure. But the third option may be catching on in popularity as banks and local governments fall further behind the foreclosure crisis and the value of properties falls far lower than the amounts that homeowner owe to their mortgage companies.

This post is a follow-up to a previously written article on how homeowners can walk away from a home in foreclosure, and what they should expect if this is their choice. Just leaving a home to its ultimate fate in the foreclosure is obviously the least-desired option, and can result in the most damage to the homeowners' credit and the house itself, if it become a target for squatters or vandals. With property values declining and foreclosure victims owing more on the mortgage than their homes are worth, though, many more will consider whether or not to abandon their home.

When examining this option, though, numerous questions should be raised by the owners. It is not an easy decision to leave a house in foreclosure, and many consequences may be forthcoming, from renting a new apartment while the previous house is being foreclosed, to informing the mortgage company of their decision to give up. Many of these aspects will be left up to the homeowners for the final decision, but they should keep them in mind when searching out options to stop foreclosure, or considering leaving the house to move on with their own lives.

Informing the Bank

Once the owners have made the decision to move out and give up their fight to keep the home, the lender will continue foreclosing on the house. This process will not stop. However, the foreclosure victims will have to decide whether or not to inform the bank that the house will be empty from now on, which may make it a target for break-ins and theft. The ethical decision may be to inform the bank, either through a phone call or in writing to the lender or its attorneys, and let them deal with the security of the property. Homeowners may even be able to write the county and inform them that the house will be abandoned due to the foreclosure status.

Reasons that the owners may with to avoid this, though, include the fact that they are still responsible for the house as long as they own it, and the possibility of informing government or bank representatives who will use their knowledge of the empty house to take advantage. If either party knows that the homeowners will be moving out, they may wish to keep track of them in order to hold them accountable for any damage that occurs to the property once it is abandoned. Homeowners who want to make a clean break and leave the entire experience behind them may just wish to move on.

Forwarding Address

This leads to the issue of leaving a forwarding address with the local post office. Unless homeowners wish to continue receiving mail from the lender, its attorneys, and the local government and court system, as well as assorted junk mail, they may wish to avoid this. If the post office informs the lender of the new address, then the lender can still have official papers served on the owners to have them appear in court for the eviction hearing or sue them again after foreclosure.

Of course, one alternative to this would be transferring all of the relevant bills and personal accounts to a mailing address at a PO Box or commercial mail receiver, such as the UPS Store. Homeowners moving into an apartment can keep their mail as private as possible and avoid the bank or local government knowing exactly where they live and being able to keep harassing them long after the foreclosure process has ended.

Explaining an Abandoned Home to a Landlord

Many homeowners who decide to leave their home will be able to move into a second home or live with friends or family until they have recovered financially and are able to purchase or rent a new home. Many others, though, will have to find some way to explain right away to a landlord why they have not made a mortgage payment in some months and are now trying to rent a new apartment. This is an awkward situation, at best, but it can be approached two ways.

First of all, the homeowners can be completely up front with the potential landlord and explain why they have fallen behind on the mortgage, and why they decided to leave the house. They may wish to explain that the bank was unwilling to work with them, despite their now-stable income and temporary financial setback, and that they would rather move on with their lives than fight for a house that is not worth it. Reasonable landlords are aware of the fact that some renters may be renting exactly because they are looking for a fresh start. Offering the owner an extra security deposit or offering to pay rent in advance for a few months will help persuade them to give the homeowners the benefit of the doubt.

Alternatively, if the homeowners have been able to save up a significant amount of money while facing foreclosure, they may be able to avoid a credit check for an apartment altogether. By explaining their concern for privacy and not having their credit scarred even further with another inquiry, and by offering to pay 6-12 months rent in advance, many landlords can set up an agreement where credit will not be checked. Paying half a year or a year's worth of payments in advance is like having money in the bank, as well, and will ensure that the owners have a stable place to live for at least the short term.

There are a number of aspects that must be examined when considering the possibility of abandoning a house to foreclosure. Renting, informing the bank, and setting up a new mailing address are just a few of these that homeowners may overlook, but which should not be left to chance. Leaving behind an unaffordable house to be dealt with by the banks and courts is never an easy decision and should not be made lightly, but homeowners need to consider all of the consequences of this action before making their move.

In most cases of foreclosure, it is the first mortgage company that initiates the process. The second mortgage may file its own foreclosure in order to protect its interest in the property, but even this is somewhat uncommon. The second lender would much rather work with the homeowners to find a solution to avoid foreclosure entirely, if possible. However, if the homeowners are simply too far behind on the second mortgage but up to date on the first, there is a good chance that the second lender will declare foreclosure on the house.

Any lienholder can try to force a sale of the property through foreclosure, but usually only the first mortgage will get paid off through the proceeds of the sale. This is because there usually just are not enough proceeds at all for even the first lien to be paid in full, let alone extra ones after that. It just makes more sense for the second mortgage to try to work with the debtors to find a solution, since they would most likely not get anything from a sheriff sale. Especially with the declining real estate market right now, second mortgages may have loaned tens of thousands of dollars more than the home is currently worth, which guarantees they will not receive anything from a sheriff sale. County foreclosure auctions usually consist of very low bid amounts and few bidders, resulting in properties selling for far less than their current market values.

If a participant at the foreclosure auction placed a bid and won, the proceeds of the sale would be distributed like any other foreclosure, regardless of which mortgage company actually began the foreclosure process in the courts. The property taxes would be paid first, since the bureaucrats need to get their hands on the money as quickly as possible. Then the first mortgage would be paid off with as much of the proceeds as are left. Unfortunately for second mortgage companies and other junior lienholders, the winning bid at auction is usually not even enough to cover the entire first mortgage. In fact, most of the time it is one of the banks that bids on the property to ensure that they will be able to sell it after the foreclosure if there are no other bidders.

After the first mortgage is paid off in full, though, then any other liens, including the second mortgage, would be paid in order of when the lien was filed with the county recorder. If there is enough money to pay all of the second mortgage, then they get all of the rest of the money until their lien is paid in full. Then anything remaining goes to other liens or to the homeowners as their gain from the sheriff sale. If there is not enough to pay off the second mortgage (or even all of the first mortgage), then the second will not be paid off at all or in full. It will be up to the mortgage company to sue afterwards for a deficiency judgment after the foreclosure has ended (an unlikely occurrence).

Thus, just because it is a second mortgage who begins the process of foreclosure, it will not really change the order of how the liens are paid off through the foreclosure auction. Any bidder at sheriff sale, whether the bank or a third party, will still end up with a title that has had the liens on it discharged through the county foreclosure auction. And the homeowners will have to move out of the property at the appropriate time or be faced with the possibility of a forced eviction. No matter which mortgage company initiates the foreclosure, the process will move through the court system in exactly the same way.

A partial claim is an option available to homeowners with FHA loans who meet the Department of Housing and Urban Development (HUD) guidelines for a partial claim (see below). With this option, homeowners are given an interest free loan, guaranteed by HUD, to pay off the arrears and reinstate a delinquent loan. This loan is must be repaid when the first mortgage is paid off, or when the property is sold. After a partial claim is completed, the homeowner does not need to worry about foreclosure or losing their home.

Homeowner must have the following partial claim qualifications:

• Long term ability to repay the loan and make normal payments.
• Inability to qualify for a forbearance agreement or workout plan.
• Ability to prove that the financial hardship is over.
• Homeowner must continue to live in the property and keep it in good livable condition.
• Existing loan must be at least 4 months, but not more than 12 months, delinquent.

Many people think a partial claim can not be combined with other options to stop foreclosure, such as a forbearance agreement, or a Chapter 13 bankruptcy; however, if done correctly, these options can be combined to allow an even more affordable payment. In general, a partial claim is a one time occurrence, but in rare cases, when a second, unrelated hardship has taken place, a second partial claim could be approved.

If you have fallen behind and you think you may qualify for a partial claim, you should contact your lender immediately and discuss this option. If you lender is not cooperative, or if they say you are not qualified, then you may want to seek the help of a professional to help you secure your right to a partial claim. In many cases, your lender may automatically turn you down, because they are not familiar with this process, or they are simply too lazy to begin this process. Either way, do not give up; just find a professional who can help see you through this process until it is complete.

The possibilities of homeowners finding some way to get out of the foreclosure process before losing the houses are nearly endless. One of the most common methods, of course, is when they recover from a financial hardship fairly quickly and are able to save or borrow the money necessary to reinstate the loan. No payment arrangements are made, and refinancing is not considered; the homeowners simply take whatever savings and income that they have available and send it to the mortgage company, paying off the total amount behind.

But can the lender continue with the foreclosure process, even if the homeowners pay back the total amount behind? The short answer is no, absolutely not. If the former foreclosure victims can make up the payments that they had fallen behind, along with the extra interest, late fees, and other costs, then they will not go into foreclosure. The bank no longer has any reason to pursue the foreclosure process, and the courts would recognize that if the lender's case is challenged.

The bank sues for foreclosure because its clients are in default of their agreement to make the mortgage payments on time for the life of the loan. Once the homeowners have missed several months of payments and the mortgage is in default, the bank can use the courts to enforce the foreclosure laws designed to help them recover the property as payment for the loan. The bank will sue to have the government sell the house out from under the current owners to make good on the owners' commitment to pay the loan or give them the underlying collateral, which is the house itself.

But if the homeowners are not in default any longer, then the bank has no reason to sue them to take over the property. The lender is not suffering any damages, and the owners are not in breach of the contract if they have managed to pay back the missed payments to being current. The payments will have to be accepted by the mortgage company, but there is no legitimate basis for them to send back payment in full of the amount behind. (Of course, that does not stop fraudulent mortgage companies from doing exactly that on a regular basis, but that is not the majority of cases.) It is not only a bad idea from a legal perspective, it is simply bad business not to accept a large amount of money that will bring the loan back to a current status.

Without the homeowners being behind on the mortgage, the bank can not sue them to force the sheriff sale of the house to pay the defaulted mortgage. Saving or borrowing enough money to reinstate the loan is a perfectly acceptable method that homeowners use every day to stop foreclosure on their homes. In fact, this is possibly the most used option, although it is not often reported, because the owners do not seek third party assistance, and the bank may hold off on beginning the foreclosure process if the homeowners have promised that they will be able to come up with the money shortly.

Many foreclosure specialists and mortgage brokers often find it very difficult to work with the mortgage company, especially when a loan is with the foreclosure or loss mitigation department. Getting a call back in a timely manner is near-impossible, regardless of the fact that these same lenders spend money hiring collection agents to call the homeowners all day at home, work, and on their cell phones. But even when a representative from the lender speaks with a human voice instead of throwing clients and third parties into a maze of automated systems, the results are usually just as frustrating.

Unfortunately, the foreclosure case managers from lenders are frequently childish and aggressive, not willing to lift a finger to help their clients save their homes. This is often extremely bewildering to the average homeowner or foreclosure specialist, since the conventional wisdom is that mortgage companies do not want to foreclose on these homes and would rather work with the homeowners to find a solution to stop foreclosure while there is still time. Sometimes their unwillingness to come to a resolution with the homeowners stems from incompetence, sometimes fraud, but many times it is partly the homeowners' fault.

The most likely scenario is if the homeowners are very far behind and have been working on one plan after another to save the home for months, none of which have gone through. The foreclosure or sheriff sale may have been postponed numerous times, as the lender gave the foreclosure victims the benefit of the doubt that they would be able to work their way out of the problem and save the home.

But by the time the newest foreclosure help company starts working on the file with the owners, the bank is just no longer willing to do anything, after dealing with so many broken promises. They may feel that they have given the foreclosu