The loss of the family's home through foreclosure is a terrible waste.

However, many foreclosures can be avoided by homeowners being pro-active. Most financial institutions would rather work with the homeowner to get paid than to suffer their own loss through foreclosure.

What is foreclosure?

When you sign a mortgage agreement, you're agreeing that you will pay the mortgage lender until the debt is paid off. If you miss a payment, the lender may legally go to court and force you into foreclosure.

That means the lender takes over your home and property, and you and your family must move out.

The lender will try to re-sell the house, but if the price is less than what you owed on your loan, you will still be responsible for the difference. So, you could lose your home and still owe money to the lender.

A foreclosure also will stain your credit record, making it more difficult for you to get credit in the future.

Never take a threat of foreclosure lightly.

How should you deal with it?

The first step a homeowner must take is to respond quickly to any hint of foreclosure.

Contact your lender immediately, explain your financial problems that have lead to being late with your payment, and try to work out a plan so you can get caught up in your payments.

Your options vary, depending on whether you have FHA or conventional loan, but you do have options.

Where can I go for help?

Saving Homes in Hickory Hill: Foreclosure Intervention Project
Click here to download the Realtor Form

The U.S. Department of Housing and Urban Development has a pamphlet addressing foreclosure issues for people with FHA loans. The pamphlet, which is also available in Spanish, can be reached at:
http://www.hud.gov/foreclosure/index.cfm?&lang=en

HUD has additional information at
http://www.hud.gov/offices/hsg/sfh/econ/econ.cfm.

Credit Counseling Resource Center (for conventional loans)
phone: 1-888-995-HOPE

If you have a conventional loan, your options are bound by the agreement you signed with that lender. These vary from state to state and also from lender to lender.

However, you should immediately sit down with the lender to discuss possible refinancing, modifying the loan and coming up with a payment plan to pay back the late payments.

Lenders have more flexibility in dealing with temporary financial setbacks rather than permanent ones.

Important

Two things to remember in any foreclosure situation:

1. Keep all of your paperwork. This includes any papers that show how and why you became unable to meet your mortgage payments, whether through job loss, salary cutback, divorce, etc.
2. Good communication shows your willingness to work this problem out together: you and the lender. You both have a stake in these negotiations, and you both have to be clear about what's possible and what's not.