Many people think that refinancing is a good solution when they are trying to stop foreclosure. This is generally a smart idea, if you have equity in your home and if you refinance before your credit is ruined from the missed payments. The problem is that most people do not fall into this category. Most foreclosure victims have very bad credit and no equity. This means that the majority of people facing foreclosure and wasting valuable time trying to find a foreclosure loan.

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

In some cases, simply asking your lender for a loan modification will work. But more often than not, you will need to hire a professional negotiator to work on your behalf. When you hire a professional, make sure you do not pay money up front, or if you do, it goes into an escrow account until the case is complete. If you do not get results, you should not have to pay for their services! Do your research and be careful not to get scammed. New laws are in place to protect homeowners, but criminals will always be there to steal your money if you let them.

When working with your lender, you will have to complete a loss mitigation package when requesting your loan modification. This will help them determine your qualifications. This is where a professional will come in handy, since getting turned down can be irreversible. It is important to submit a package that is complete and can be approved the first time around. You may be asked to provide proof of income, as you did when you obtained the original loan. Whether or not things have changed with your income is one of the things that the banks will look at.

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

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

Regardless of what you decide, it is important to know that you have options and letting the home go to foreclosure is never a good idea. Your credit will be ruined for years to come and buying a new home will be virtually impossible until you have recovered. Do not be afraid to ask for help or seek a professional to help you through these rough times.

Obtaining a loan modification is one way that a consumer can avoid foreclosure. Not everyone qualifies and not all banks are participating. But, if you are having trouble paying your mortgage, it is worth your while to call your lender and find out what programs they offer. You may not always get the answer you are looking for, but once you get the right person on the phone, you will drastically increase your chances of saving your home.

A loan modification can take several forms. It is a permanent change in the original agreement made between you and your bank. In other words, it is not a temporary fix, like a workout plan or forbearance agreement; it is a long term plan that will last the life of the loan. But it is important to understand that most lenders will not approve a loan modification if a temporary fix would also solve the problem. When presenting a modification, you will need to present your case in the best possible light. This is why many people choose to hire a professional to negotiate with their lender, rather than attempting such an overwhelming task on their own.

The items that can be changed include the interest rate, the length of the mortgage, the amount of the monthly payments and the amount of the principal, but only in rare cases is the principal reduced. Usually, adjustments are made that increase the principal in order to cover any past due amount or other charges that could result in a lien being placed on the property. If a principal reduction is needed to make the loan affordable, and it can be justified by a market value that has declined since the purchase, then an adjustment can be negotiated. In every case of a mortgage modification, we recommend getting a BPO (Broker Price Opinion), appraisal, or a Property Valuation to prove the current value to your lender. However, a full appraisal is costly and generally not necessary. Both other items mentioned above can be purchased for around $100 and should adequately prove the value to your lender.

Banks all have waiting periods. Some lenders seem to take longer than others to get back to their customers. Bank of America, for example, has been mentioned in hundreds of complaints to the Florida state attorney general for failure to act promptly when contacted by homeowners. It is very important to not just sit back and wait for your lender to take action. You need to be very proactive by contacting them on a regular basis and making sure you have submitted all the documents they requested.

Typically, a bank will offer the customer a “trial period”. If you are offered a trial, you will be asked to make your payments on time for three months in a row. Some banks allow you to make the modified, lower payment. Others ask for your current payment, whatever that may be. Many cases we see start with a workout plan and then the loan is modified after the first three payments. A workout plan is when you make your regular payment, plus an additional amount that is applied to the arrears. This type of plan requires you to make three higher payments until the loan is modified.

A major problem with agreeing to this type of plan is that you are relying on your lender to actually modify your loan three months later. In our experience, lenders almost never follow through and will say almost anything to try and collect their money. Trusting them is never a good idea, so make sure you get everything in writing and follow any plans you have agreed to. Never agree to a modification, workout plan, or repayment plan that is not affordable.

Overall, a loan modification is probably the best possible way to keep your home and stop foreclosure, so do not waste any time and get started today. Your first step is to call your lender and ask them for possible options to stop the process of foreclosure. They should have a standard loss mitigation package for you to complete and return to them. If they do not respond with an affordable plan, or worse yet, do not respond at all, then you may need to hire a professional to negotiate on your behalf.

No matter what happens, you will know you did everything possible to save your home.

Happy Thanksgiving to all our visitors!

Here are some things I am thankful for this year:

• My health.
• The knowledge I gain from my studies.
• Having an opportunity to spread important information with the world on this website.
• Running in the summer.
• The peace felt just sitting and thinking.
• Great times with friends and family.
• The wisdom to put life in perspective.
• Meeting new people and turning strangers into friends.
• All of the businesses and people working in the private sector for the cause of furthering civilization.
• Working hard and earning a rest.
• All of the people I have talked to over the years who have helped me understand the real estate industry.
• Sharing my thoughts with others.
• Stretching, yoga, massage, progressive relaxation.
• Getting enough sleep.
• Knowing what matters in life.
• Going for a walk on a beautiful day.

From everyone at ForeclosureFish, we hope you and your family have a wonderful Thanksgiving.

Foreclosure is not the only way to help save your finances. While there are numerous options available to homeowners, sometimes the best solution is to give up the property and get a fresh start. In these cases, a deed in lieu of foreclosure can be a much more viable option.

With a deed in lieu, you are handing over the deed to your property instead of going through the foreclosure process. This means you will no longer own the home at all and will no longer be responsible for the mortgage payments.

The deed in lieu process has to be completely voluntary on the part of both the homeowner and the lender. Many lenders require the owners to write/sign a statement indicating they are participating in this procedure voluntarily.

Why would you even want to consider this option? The primary reason is that once the process is completed, you are completely released from any debt associated with that particular loan. You will not have any mortgage payments or back payments hanging over your head.

Also, deed in lieu is not a foreclosure so there’s not the same negative connotation associated with foreclosing on a loan. Even your credit does not suffer nearly as much with this procedure as it does with actual foreclosure.

You may even get much better terms through the deed in lieu than you would with foreclosure. Many people aren’t aware that when they foreclose on the house, they could still be held responsible for any liens or other mortgages. You do not have that issue with the deed in lieu of foreclosure.

This is also better for the lender. Foreclosures are costly and can take quite a bit of time to be completely processed. During that time, some people will take advantage and will destroy the property. This means that the lender loses out on the full mortgage and also has to pay for repairs.

There are two primary forms associated with the deed in lieu of foreclosure: the Agreement in Lieu of Foreclosure, and a form of the deed.

The Agreement in Lieu of Foreclosure is the actual document which details the terms and conditions of the deed in lieu. It identifies exactly what is being transferred to the lender. This document will be signed by both parties involved.

The other document involved is the deed. The deed could be in the form of a Warranty deed, a quit claim deed, or a grant deed depending on your state and county. All of these versions are essentially the title to the property stating who actually owns the property. This form will ultimately go to the lender.

The homeowner will also get a form which officially says the mortgage debt is canceled. This proves that you no longer have to make any payments on the property, and the transfer of the deed shows that you no longer have any ownership interest in the house.

You will also receive some sort of waiver to the right of deficiency judgment. This is a vital piece of paper for the homeowner. This waiver means that the lender can not come back and try to get you to pay for any monetary difference if they have to sell the house for less than was owed.

After you have received your formal cancellation notice and the waiver of right of deficiency judgment, you might still be liable for taxes. This will depend entirely upon your state and the circumstances of the sale. It would be best to consult with a tax professional to find out all the details.

In some states, when a property changes hands the original owner is responsible for paying the deed tax. This tax is figured by using the difference of the current market value of the home minus the mortgage balance and any liens on the property.

You probably will not have to pay income tax on the property to the US government though. Through the end of 2009, the Mortgage Debt Forgiveness Tax Relief Act states that property changes through deeds in lieu of foreclosure do not have to pay federal income tax.

However, there are a few stipulations to this act. The home must have been your main residence for at least 730 days. This time doesn’t have to be concurrent. The deed in lieu has to have been processed between 2007 and 2009. The debt relief cannot equal more than $2 million. The forgiven debt money has to be used either on that property or for paying off other debts -- you cannot simply pocket any money gained from this process.

Yes, facing the loss of your home can be emotionally stressful, but it does not have to completely ruin your financial future. By utilizing alternative methods such as the deed in lieu, you can come out much better than with a foreclosure.

In these tough economic times, many people are looking to make money through real estate, especially with all of the new programs and subsidies being offered to buyers. One of the fastest, simplest ways to do this is through the purchase of a sheriff sale.

A sheriff sale is an auction-style sale of a house which was foreclosed on. This type of sale is so-called because, in most states, the county sheriff has to take care of a number of tasks during the foreclosure process and usually conducts the sale of the property on the courthouse steps.

This does not mean you will deal with the actual sheriff’s office, however. In many states, because the sheriff has so many other vital tasks to perform, the process of conducting the sale is contracted out to other companies.

While there is potential to make money buying properties through this process, you must keep in mind that there are also risks involved. You must do your research prior to attending the auction, or you may end up with a property you can not move into and can not fix up.

You want to check and see what, if any, other judgments there are on the house. This means looking for other mortgages, liens, etc. Once you purchase a house through the sheriff sale, you become responsible for any other judgments associated with that house. These other loans may or may not be provided in the sale advertisement.

Often you will also become responsible for any back taxes owed on the property. Sometimes this will be paid off through the sheriff sale itself, but it is always a good idea to make absolutely certain. Again, this is information you should research prior to deciding to bid on the property.

If possible, you should check out the property you are interested in. It is not always possible to do an actual walk-through, but it never hurts to try. Speak with the current owner/occupant of the house. They may be willing to allow you access to the house with some concessions on your part.

Once you buy that house, you could become the current owner’s new landlord which can be a bargaining chip for you at the research phase. You could also, potentially, become the current tenant’s evictor if you can not or are not willing to let them continue living there. Evictions can be a timely and costly process.

In most states you will have to pay a large sum of money on the day you buy the auction. A lot of the time, you are expected to pay for the house in full on that day, or at least put down a substantial amount in cash that day and pay for the rest within a short amount of time. This does vary from state to state.

You should make some phone calls to find out exactly how much you will be expected to pay as a deposit on the auction date, how long you will have to pay off the property in full to the state, and what types of payment will be accepted such as a cashier’s check or wire transfer.

A sheriff sale is a kind of “buyer beware” sale. You cannot back out of the sale once your bid is accepted, or you may forfeit your deposit and the auction will have to be conducted all over again. So do your research before placing a bid.

The first thing you need to look at when considering buying a home through a sheriff sale is what is the potential profit for you? To determine the profit subtract the difference between the current market value of similar homes in the area and what the home is expected to go for at auction. This difference will help you decide if the property is worth investigating further.

Sheriff sales are usually advertised 4-6 weeks prior to the auction, although in some states there is more notice before the auction. This should give you more than enough time to do your research. Many sheriff sales are also postponed numerous times, thus delaying the process even further.

If you are new to the process of purchasing foreclosed homes, go to a couple of auctions to observe the proceedings so you know what to expect on the day of your auction. This is also recommended for foreclosure victims themselves to find out what will happen to their own home.

On the day of the auction, call ahead to make sure there have not been any changes made. Sometimes these sheriff sales are canceled by the lender or its local attorneys without notice or homes are removed from sale. Often, they will be rescheduled for a later sale date.

Make sure you pay careful attention at the auction. These auctions go very quickly, with many homes in varying conditions sold or returned to the lender with no bids. Observe those around you to see what they are bidding on, why they chose those properties and how much they bid.

Do not share with others which property you are interested in and why. And absolutely never tell others what your bidding ceiling is -- you are doing this to make money, not give it to the next guy. Play your cards close to the chest and there will be less competition for the home you want.

Once you have successfully bid on the house and the sale has been confirmed, you will receive the deed to the property. You will need to make sure you properly register that deed with the county and state. Sometimes you are able to do this at the actual auction, but most often registering the house will take some more legwork on your part.

The bottom line is that the careful buyer can potentially make a considerable amount of money purchasing homes through a sheriff sale. As with most real estate ventures you must do your research before buying will ensure your success in obtaining the type of home you want in the right condition.

For homeowners who are behind on their mortgage payments, a bank modification may be just the thing to save their home. This is a process where homeowners can renegotiate the terms of their home loan in order to avoid having to foreclose on the house.

With a bank or loan modification you could potentially lower the interest rate, reduce the principle owed, catch up on delinquent payments, change your interest rate from an adjustable rate to a fixed rate, and avoid foreclosure. This process is for homeowners who are already behind on their mortgage payments.

During the course of the modification process, you will be changing the terms on a current loan for your primary residence. For most of the programs currently offered by banks and the government, you must live in the house, not use it as a rental, vacation, or investment property.

Because there have been some problems with a few banks responding very slowly to the bank modification, you might want to consider using a loan modification company. This can be a good idea as long as you select a reliable, reputable company, and stay away from the various new foreclosure scams that keep cropping up.

Many bank modification companies use specialists and consultants instead of attorneys. You really want to go with a company that is using lawyers to negotiate with the lenders. The attorney will be more familiar with all aspects of the law and will be better prepared to really fight for your needs.

You should avoid companies which promise to make the bank modification process quick and easy. Whether the process is quick or easy depends to a large degree on the bank itself -- not whichever company or individual is negotiating with it. This is a time-consuming process and the law is never an easy thing to work with.

For homeowners who simply do not have the time or willpower to invest in such a long process, you will want to avoid do-it-yourself (DIY) modification kits. It can very difficult for any one kit to provide all of the information you will need to go through this process completely on your own.

Also, watch out for websites claiming to be government sponsored sites for this process. The FTC has warned about websites using President Obama's name while advertising the new modification program. If it is an official government site, it has the “.gov” tag at the end. All other tags are not true government sites.

However, it should be noted that most people are perfectly capable of obtaining a bank modification without assistance. Remember, the bank makes its decision based on your financial situation, not on who is doing the actual asking.

You should consider contacting your bank first. Their loan consultant will provide you with the information you need to file for a mortgage modification. If you feel completely overwhelmed at this stage, then you might want to consider seeking external help.

Why would your bank agree to a modification? The alternatives are really no better than foreclosure. The bank could repossess your house and try to resell it for a much lower price than what you owe. It could also accept the loss of your payments and let the house sit. You could also decide to declare bankruptcy which results in little or no money going to the lender. Finally, the lender could try to collect the money from you or hire an outside collection agency to do so.

None of these are really viable options for either you or the bank. Your credit would be ruined, and the bank gets little or no money and sometimes even takes a loss. Damage may be done to the property directly, or it may fall into disrepair the longer it sits on the market unsold.

When you apply for a bank modification you will need to prove you have suffered a temporary financial hardship which caused you to fall behind in your current payments. The bank will want to see the following information: Your monthly income (including any money earned by your spouse) shown on your most recent pay stub. A detailed list of your expenditures. This means sitting down and figuring out exactly what you spend on other bills such as transportation (car, bus, etc.), credit cards, electricity, water, groceries, alimony- literally everything you spend any money on. Your most recent bank statements. The lender will want to see proof of the list you made in the previous step. You should be prepared to show a couple of months’ worth of statements. Any other loan paperwork you might have- for the mortgage or any other loan (especially if you have taken out a second mortgage or have a home equity loan).

The more thorough you are in presenting any financial information the easier it will be for the bank to decide whether or not to approve your bank modification. You should also prepare a hardship letter explaining exactly why you fell behind, as well as why you are now able to make a reasonable monthly payment.

Once you have presented your information, it can take the bank weeks or a couple months to make a final decision. During this time, you may need to continue making whatever payments you can, as well as staying in touch with the lender for status updates. The bank will let you know what they expect from you during this time frame- if they do not, make sure you ask.

Do not let your financial struggles result in your home being taken away. Ask for a bank modification before this happens, and you may be able to work out a solution with the lender that allows them to keep receiving payments and for you to continue living in your property.

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.

Beginning in 2009, President Obama agreed to legislation designed to provide mortgage help for millions of homeowners around the country. The government will provide about $75 billion dollars to help people hold onto their homes through a variety of different plans.

When the economy took a nose dive, many people found themselves out of work or having to take serious pay cuts. This meant that some people found it very difficult to keep up with their mortgages. For the first time since the Great Depression, Americans in such large numbers had to turn to foreclosure in order to take care of their families.

Now, with a new administration in the White House, there is another mortgage help program so that more people will be able to hang onto their precious homes. The new bailout program for homeowners is called the Homeowner Affordability and Stability Plan (HASP).

This plan is designed to help people refinance their homes and to provide incentives to lenders to provide mortgage modifications. While previous plans have failed to provide the kind of results politicians were looking for, maybe all that was needed to change the course of the economy was a focus on platitudes of hope and change.

There are, essentially, two populations who can take advantage of this program. The first group is people who have been able to maintain their mortgage payment but who are struggling as a result of economic conditions. The second population is those people who have fallen behind in their mortgage payments.

If you have been able to maintain your mortgage payments, you may qualify for assistance in the form of refinancing your home. Normally, in order to refinance a home, you have to have at least 20% equity in the home. Under the HASP you do not need to have any equity at all in your home. In fact, you could even have a slightly negative equity and still qualify.

You may also qualify for mortgage help if your home is no longer worth what you owe. This may help a significant percentage of the real estate market qualify for the new plan, as home values have fallen so dramatically. However, you cannot have more than a negative 5% equity or difference in the home’s value in order to qualify for assistance.

The amount owed on the mortgage is also a consideration for the new program. You cannot owe more than $417,000 on your home. Home loans over that amount are considered “jumbo” loans and do not qualify under the HASP.

If you have fallen behind in your mortgage payments, you could qualify for mortgage help in the form of a government-assisted loan modification. This means that your loan will be slightly modified in order to bring down your mortgage payments.

If you qualify for a mortgage modification, you must remember that this may be for a very specific time frame. At the end of the period, your mortgage payments will slowly go back up to the original amount. However, you will not owe any back payments, as long as you successfully complete the plan.

With this form of mortgage assistance, you must qualify as a high level debt borrower. This means that every month you pay more than 55% of your monthly income on bills. These bills include your mortgage payment, car payment, and any other bills you might have such as credit cards.

After your loan modification, your total monthly output for your mortgage bill should be less than 31% of your monthly income. Lenders and mortgage servicers must help reduce your payment to 38% of your income, while the government will subsidize the mortgage to reduce the payment down to the 31% required amount.

If you qualify as a high level borrower, you will be required to attend some debt counseling courses certified by the Department of Housing and Urban Development. Additionally, the amount you owe on your home without interest must be less than $279,750.

With mortgage help in any form from HASP, the home must be owner occupied. This is because this government help is meant for families, not for investors and speculators, even if they are providing housing to tenants who can not afford to purchase their own home.

All loans must be owned by either Fannie Mae or Freddie Mac. If you are not sure if your loan is owned by either company, you can ask your current mortgage servicer. Additionally, you can go to www.fanniemae.com, www.freddiemac.com, or www.FinancialStability.gov. There are links at all of these sites to help guide you through the process of applying for mortgage help.

Something else to keep in mind is that the Homeowner Affordability and Stability Plan is not going to be available forever. The plan is scheduled to terminate in December 2012. Homeowners who wish to examine their options should not wait until the last minute, even if it is three years off. The foreclosure process can take much longer than people expect.

The first step you must take in determining if you qualify for mortgage assistance is to contact your lender. There are a number of forms that have to be filled out, and it does take some time. Keeping on top of the application process is often the most difficult, as servicers are notorious for losing paperwork and forcing borrowers to start all over.

When you contact your mortgage lender, you will need to have a number of documents available: monthly mortgage statement; Homeowner’s Association statement; pay stubs; W2s; income tax return; car loan paperwork; student loan documents; credit card statements; any loan statements which are tied to the house such as a second mortgage, judgment lien, or home equity loan; and a profit and loss statement if you are self-employed.

You should have the most recent statements available before you contact your lender. Lenders can and will return your application if any of the paperwork is not the most recent available at the time you request help. In many cases, they will simply put your file on hold until you call and ask for a status update, at which point you will be told your paperwork was incomplete.

Although the process of obtaining a refinance or modification can be a huge project, getting mortgage help is definitely much preferable to facing foreclosure. Few homeowners really want to lose their homes if there are viable alternatives.

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.

If you are thinking about applying for a mortgage modification, your first step should be to contact your current lender. The new government sponsored refinancing programs are designed for people that are having trouble making their payments.

If you are not having trouble, but would like to take advantage of lower interest rates or you wish to finance for another reason, you might not qualify for the government programs. In order to qualify for those programs, you would be required to sign an affidavit of financial hardship.

The programs are not designed for investors. People that bought houses hoping to resell them for a profit or planning to rent them out do not qualify for refinancing under the plan. The plan was created strictly for owner occupied residences.

It has been estimated that as many as nine million homeowners will be able to obtain more affordable loans with the government’s help. If you are one of the four to five million homeowners with a Fannie Mae or a Freddie Mac loan, you qualify for refinancing, even if you have a “solid” payment history.

If you are currently in default, your bank may be willing to work with you to obtain a mortgage modification. Your new interest rate could be as low as 2%. Banks are more willing to work with their existing customers for several reasons.

At one time, foreclosing on a property was a good idea. The bank could auction off or resell the property for more than the balance owed. But, with home values falling and a lack of qualified buyers, it usually makes more sense for the bank to keep you in your home. In many cases, they are unable to get enough at auction to pay off the existing balance. They retain ownership of the property, but it could be years before they can sell it.

If you are able to obtain a mortgage modification, the terms that you originally agreed to will be changed permanently, but that doesn’t necessarily mean that your payments will stay the same for the life of the loan. Some banks are offering a reduced payment only for five years or so. Remember to think about it carefully, before you sign up for that deal.

One of the contributing factors to the high foreclosure rates seen over the last few years were loans that were written with the 5-10 year low monthly payment. After the 5-10 years passed, the homeowners were unable to pay the new higher payment.

In addition, the amount that they paid for those first few years was only enough to cover the monthly interest on the loan. So, the original principal was still the same at the end of the introductory period as it was when the loan was originated.

It would probably be in your best interest to try and get a permanent mortgage modification, with a fixed interest rate, not a variable rate. We all hope that we will be making more money in years to come. But, that is not always the case.

To qualify for the government programs, there is no minimum or maximum “loan to value” ratio. So, regardless of your home’s current value, you could qualify. That’s an important point, because bank refinancing guidelines normally require that there is equity in the home.

So, what’s the downside? The biggest complaints that people have had since the new guidelines were created has to do with the bottleneck created by the huge number of customers that are applying for mortgage modification.

Some people have waited for months only to find out that they do not qualify for refinancing. The best suggestion for anyone that is applying for a mortgage modification is to keep in contact with the bank.

Some of the customer complaints indicate that the bank did not contact them, but the banks say that they attempted to contact the customers. So, call them on a weekly basis. Make a note of the day and time that you called, as well as the person that you spoke with.

If you are not satisfied with the way that your deal is handled, you can file a complaint with your state’s attorney general. Filing a complaint won’t help you get your mortgage modification, but it might make you feel a little better.

Obtaining a loan modification is one way that a consumer can avoid foreclosure. Not everyone qualifies and not all banks are participating. But, if you are having trouble paying your mortgage, it is worth your while to call your lender and find out what programs they offer.

A loan modification can take several forms. It is a permanent change in the original agreement made between you and your bank.

The items that can be changed include the interest rate, the length of the mortgage, the amount of the monthly payments and the amount of the principal, but only in rare cases is the principal reduced. Usually, adjustments are made that increase the principal in order to cover any past due amount or other charges that could result in a lien being placed on the property.

Banks all have waiting periods. Some lenders seem to take longer than others to get back to their customers. Bank of America, for example, has been mentioned in hundreds of complaints to the Florida state attorney general for failure to act promptly when contacted by homeowners.

Typically, a bank will offer the customer a “trial period.” If you are offered a trial, you will be asked to make your payments on time for three months in a row. Some banks allow you to make the modified, lower payment. Others ask for your current payment, whatever that may be.

You may be asked to provide proof of income, as you did when you obtained the original loan. Whether or not things have changed with your income is one of the aspects of your current financial situation that the banks will look at.

In normal refinancing, a lender will usually deny applications when the home’s value has fallen below the loan amount. This is one of the things that the government was able to change. It was an important change, because home values have fallen across the country.

So, even if you have tried and failed to obtain refinancing in the past, you may qualify for a new loan modification. The government program is called the Home Affordable Modification Program. Some half a million mortgage holders are currently in the trial process for the program.

In order to qualify for the program, your original loan must have originated on or before January 1st, 2009. Two recent pay stubs and the most recent tax return must be submitted and you must sign an affidavit of financial hardship.

In addition to the loan modification, which will be available only until December of 2012, unless changes to the current program are made, there is a refinance program that ends in June 2010. There are other options that can help you avoid foreclosure, as well.

Several companies are offering to buy properties from homeowners that are facing foreclosure. That could save your credit rating from the damage that a foreclosure can do.

There are also foreclosure prevention services that help homeowners with the negotiations, which can sometimes be lengthy and confusing. The companies charge various fees for these services. So, it’s a good idea to do a little comparative shopping before you sign up for the service.

You might be wondering how much lower your payments will be with a loan modification. While that depends largely on the original interest rate, the principal and the length of the loan, some homeowners have had their monthly payment reduced by nearly $100.

Temporary modifications are another suggestion made by some banks. Instead of getting a fixed rate for the life of the loan, the bank could reduce your payment for a period of five years or more.

A temporary mortgage modification is a good idea for someone that expects their financial situation to improve over the next few years. If you or your spouse is currently unemployed, for example, you may be able to afford a higher payment in five years.

The goal is to get the payments down to around 30% of your monthly income. That is considered affordable by financial experts. If your income is not sufficient for even a reduced payment, then you will have to consider other alternatives, such as selling your home. But, with the loan modification and refinancing programs, as well as other available options, you should be able to avoid foreclosure.

One option for those homeowners having trouble making their mortgage payments is a foreclosure refinance. In the past two years, millions of people have had their mortgage payments sky rocket due to rising interest rates. Adjustable rate mortgages have a fixed rate for the first year or two and many people find they can easily afford the payments at this level for a short period of time.

But then the rate freeze ends. The mortgage rate begins to rise. And with it the payments also go up -- sometimes rising by hundreds of dollars a month. The once affordable payments now squeeze the household budget. And then the next rate hike goes into effect. A once comfortable budget is now bleeding red and there is no hope for it to stop. What can a home owner do to make the bleeding stop?

When a homeowner sees that they are not going to be able to make their next mortgage payment, they need to contact their lender right away. If it is a short term problem, many lenders will forebear the amount for a month or two until you can pay it back. Most people are willing to take on a second job for the short term to get out of a financial hole. But, with payments beyond the household’s budget, it is not that simple. Once rates adjust, they are not going to go back down any time soon.

The home owner needs to take the initiative and speak with their lender. When the loan gets in arrears, the lender becomes more receptive to listening but they also get more nervous about seeing the money get paid back. A foreclosure refinance to a fixed rate loan may be the answer to both of their troubles. But many lenders are shy about refinancing on a property so near foreclosure. You may need to look for a broker to help you.

Shopping for a foreclosure refinance can be tricky. If you use a broker to try to get a refinance, you may just be racking up fees instead of actually getting yourself out of foreclosure. Many brokers use the same lenders. You may put your application in with three mortgage brokers and all three of them may use the same lender. If you are rejected by the lender once, you will be rejected by that lender again and again.

The first question to ask the broker is which mortgage lenders they are going to be submitting your application to. If you know that ABC Mortgage Company has already rejected you, then ask the mortgage broker to submit your application to another company or find another broker. Another option is to submit your application to lenders directly. But this can be tricky since mortgage brokering is not for the beginner.

Even if you have been rejected left and right, do not lose hope. There are non-traditional lenders, such as hard money lenders and private institutions that specialize in foreclosure loans, that may be able to help you refinance your property before it is actually foreclosed on by the current bank. Their requirements are usually more lenient than the usual mortgage companies, involving no credit check.

Keep researching your options to make sure that you have taken every opportunity to avoid losing your home to foreclosure. Even with credit problems due to being out of work for a long time, there are still lenders out there who may work with you, and this may be one important and appropriate solution to foreclosure that many homeowners do not even consider.

A loan workout sounds like a cross between a yoga routine and a mortgage broker. In reality, a loan workout is what happens when a borrower and a lender agree to modify the terms of a mortgage in order to prevent a foreclosure. Basically, they are changing certain terms in order to make them more affordable for the homeowners, while still creating a profit incentive for the lender and investors, all while avoiding foreclosure.

Now, not every lender is willing to go through this routine with just anyone. The circumstances must be right for certain types of workout agreements to be in all parties best interests. And while the borrower may feel the need to know what the right combination is in order for this to work, it may be impossible to know what will work for the bank and its investors until the borrowers begin negotiating.

What needs to be in place for a lender to consider this option? First of all, the borrower must be in a position where foreclosure is a real possibility. With millions being laid off and jobs scarce, this is not a hard situation to fall into. The borrower is likely behind on their payments by several months. And it usually means that the lender cannot expect to see the payments caught up anytime soon unless something changes to make the situation more affordable.

However, the borrower must also be in a position where they can make some sort of reasonable payments. If someone has lost a job and has not found one yet, a lender is going to be very reluctant to modify loan terms because repayment is not likely to happen. The lender needs reassurance that their efforts to negotiate a solution will pay off before they are willing to do a loan workout with the borrower.

The lender is going to also look at the current situation regarding the amount owed on the house and the home's current market value. With home prices falling all over the country, many people find themselves owing more on a house than the property is actually worth now. These people bought their homes when prices were at their peak a couple of years ago and have witnessed them dramatically decline in value.

Now, some people owe more than 20% over their property's current value. A lender is going to be very reluctant to work with anyone in this situation. For a lender to be willing to do a mortgage modification with a borrower, the amount owed on the property needs to be favorable to the lender. Equity is the magic word for this. If the home is valued higher than the amount due, then there is equity. With equity, the borrower may see the prospects of a loan workout growing.

Do not be foolish to think that the lender is going to be nice to the borrower. In all of this, the lender is going to look out for its interests first. Foreclosure costs are one major aspect of the case that they look at, including how much it would cost to foreclosure and resell the property on the open market. Would it be cheaper just to foreclose on the property and try to resell it?

Be aware that foreclosure costs average over $50,000 per house. But if a property’s value is so far below the amount owed on the mortgage, that amount of money may be smaller than the bank's loss. For lenders, the only thing that really matters is the bottom line, and banks have their bottom line guaranteed by the government more and more these days. But a smart borrower will be armed with the knowledge of what the mortgage company is going to be looking at before they request a loan workout.

What is a foreclosure loan and how can it help you keep your home? A foreclosure loan is any type of loan that will replace your current mortgage. It is the type of borrowing that many homeowners seek to qualify for when they are unable to deal with their current lender, either due to higher resetting payments or a financial hardship.

The new lender that provides your foreclosure loan will pay off the current mortgage on the property. You will then make payments to the new lender as stated in the terms of the loan documents. For those facing possible foreclosure by their current mortgage lender, this is an option that is well worth exploring, especially with various government lending programs now available.

The first option every home owner should explore is working with their current lender. If you have a good payment history, your lender may receptive to working out a plan to help you catch your payments up. This may involve a repayment plan or a total loan modification, but you can not wait forever to ask for their help. The further behind you are, the less willing the bank will be to work out a solution to foreclosure.

Foreclosure is an expensive undertaking for any mortgage company. But if they do not see any sign that the borrower wants to work on the problem, they will begin taking action to foreclose on the home. For lenders, it all boils down to how they can make the most money or avoiding losing any. For the borrowers facing the loss of their property, a foreclosure loan may be what can help them save their homes.

The place to start looking for a foreclosure loan is to ask your current mortgage broker for referrals. In the past couple of years, lenders and brokers have been dealing with millions of defaulted mortgages. As stated before, foreclosures are expensive. It is in the banks' best interest to avoid them, and they may be willing to work out deals with homeowners and other lenders offering to provide funding.

These lenders have often built working relationships with brokers that specialize in foreclosure loans. By getting their delinquent borrowers in touch with such a broker, they may see the mortgage being paid off through refinancing instead of foreclosure. Another way to find a foreclosure loan broker is to talk to neighbors and friends who might have the same problem.

Internet searches are also an option, but take care that you do not link up with a scam artist. Foreclosures provide a healthy harvest for the professional scammer. People are at their most vulnerable and these cons swoop in and take advantage, and many of them will market directly to borrowers through direct mail or by calling them out of the blue offering solutions that sound too good to be true.

Be wary of any one that claims they have the magic answer to all of your problems. Often they involve legal shenanigans that can lead you into deeper trouble while they skate away with your hard earned money. If they ask for high upfront fees or for you to make your payments directly to them, run in the other direction. If they ask you to sign your house over to them in exchange for rent payments, report them to the authorities. All of these schemes are focused on them making money and you paying it to them. Your mortgage company is going to foreclose anyway.

Foreclosure loans can provide the borrower with an extended period of time to pay off their mortgage as well as lower their payments over the long term. This often provides the right amount of breathing room to allow a struggling family to get back on its feet and save their house, while avoiding paying thousands of dollars in legal fees and foreclosure charges.

Did you know that many lenders are making efforts towards mortgage modification for some home owners that are experiencing troubles? Mortgage modification is a term used when a lender changes the terms of a loan in order to help the home owner make their payments.

The types of modifications being made are unique to each situation though. And each home owner will need to find out what their options are. What kinds of modifications can be made on a mortgage to help the struggling home owner?

Adjustable rate mortgages were at one time seen as a good way for many people to get into owning their own homes. It was great while the interest rates remained low. But when rates began to rise, the payments went with them. A typical adjustable rate mortgage starts out with a low rate that is guaranteed for a year or two.

Then after the freeze time is over, the payments begin marching up. For each percent rise in the rate of the mortgage, home owners could see their monthly payments grow by $200 or more. This puts even the most generous of budgets under great strain. One mortgage modification that is very common is making an adjustable rate fixed. This helps the home owner to budget their payments and keep them current.

With the economy in trouble, millions of people have been laid off from work. Some are lucky enough to have a cushion to fall back on until they get a new job. Some do not have a cushion to fall on and even if they do, the cushion will run out at some point. Mortgage payments get behind when providing food becomes the number one priority.

A few are lucky enough to find a job after a few months, but find themselves in a hole with their mortgage lenders. They are making enough to start making their mortgage payments again, but they are behind on their monthly payments. And the lenders are adding penalties on to the amount they owe.

What do they do? Another type of mortgage modification is when the amount that they are behind is absorbed back into the loan. That way, with a steady job, the home owner can make their payments and keep their homes.

In some areas, the value of homes has dropped significantly in the past couple of years. For anyone that bought their home when prices were at their highest, they often owe more than their house is worth. That is called being upside down on their loan.

If they find themselves without a job, they are stuck between a rock and a hard place. When they try to sell their homes, they cannot get enough out of the sale to pay off their mortgage. And the lenders want the money back that they lent for the purchase of the home.

One mortgage modification that can be used, although it is rare, is when the amount owed on a home's principal balance is reduced. It is rare because the lender is going to lose a significant amount of money. But it has happened, and it may be another option for borrowers.

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.

Loan modification may be just what many home owners are looking for. A lot of people are behind on their mortgage payments. Some may only be behind 30 days. But 30 days can become 60 days or 90 days very quickly.

And then the lender starts sending the dreaded notices that if the payments are not brought up to date, they will begin foreclosure proceedings. The home owner begins feeling trapped and has no clue where to go or what to do. Let’s see what loan modification is and how do you start.

What is loan or mortgage modification? Loan modification means that the home loan is going to be changed so that the home owner can afford the payments better. This can involve adjusting the interest rate, the duration of the loan or other factors. Circumstances around each mortgage modification determine what changes to the loan can be made.

If the rate of a mortgage has jumped because it is adjustable, then one option would be to make the rate fixed. If the home owner has been out of work for a long time but now has a job, then the amount that is past due may be absorbed back into the loan.

Now how do you start? The first factor of how to start is when. With the current government programs, it is often best for the home owners to contact their mortgage lender as soon as there is trouble. Some lenders will wait until you are 30 days behind before they want to talk. But it never hurts to try sooner.

Another thing you need to do is find out who actually holds the mortgage on your home. Just because you make your checks out to ABC Company does not mean they actually own the loan. They may only be the mortgage servicer. Call the company and ask for paperwork on who actually owns the loan.

Once you know this, you know who you need to be working with. Be honest with the person you are working with. They will ask for a bunch of paperwork to show your current financial circumstances. Lying or exaggerating can get you into hot water and will end your chances of actually getting a modification of your loan terms.

How do you bring your personal situation home with the mortgage lender? Write a letter explaining how you actually got to this point. Again, be honest. In a brief concise letter, explain the full chain of events that has led you to this point.

And make sure who ever you are talking to is the right person. You need to be speaking with someone in loss mitigation, not collections. Collectors are there to hound people into paying. Loss mitigation is there to help reduce or prevent losses for the company. Be patient. What has taken you months to get into is not going to be reviewed and resolved in a day or two. Maintain contact with the person you are working with, but keep your cool.

And at the end of the day, be realistic. You are in a deep hole before you get to the point of loan modification. The hole may be deeper than the lender is willing to help you out of. But keep asking. If one person says no, another may say yes.

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.