Home owners in trouble have to fend for themselves and work through a maze that they are ill prepared to deal with. The availability of credible information is a precious commodity in the present mortgage mess.



Here are some steps to take that may help.

(1) Begin with the proper mindset. Don't panic. Understand that mortgage lenders do not want the property back. They are in the lending business not the real estate business. If they foreclose they are subjected to negative consequences like having to hold the property in their inventory and pay maintenance and management fees. This lessens the amount of money they can lend out.

(2) Gather your loan documents and review them carefully, especially the mortgage contract and the note. You'd be surprised how often the lender has not complied with some provision of the contract. This could be a defense that you use to stop the foreclosure and give you the ability to negotiate better terms with the bank. You should seek the advice of a competent attorney if you feel the lender has not kept its side of the bargain.

(3) If you or someone one the title is a soldier or sailor you may be entitled to stop the foreclosure entirely. Under the Soldiers and Sailor's Civil Relief Act, lenders may be stopped from foreclosing on a home owned by an active member of the armed forces. There are some exceptions, but this is a powerful weapon to use if it applies to you.

(4) Determine whether renting or continuing to make a mortgage payment is the best route for you. You can obtain help with this decision by contacting a local housing counseling agency in your area that assists with foreclosure counseling. They can be found at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. Just click on your state and local links inside the website.

(5) Know your options and be prepared to use them. It is not possible to go into depth with all the options available in this article. You can get more detailed information on these options by contacting a local housing counseling agency or contact the author of this article via the information provided at the end of this article.

* Modification - this option can be used to modify your present loan payments to an amount you can afford to pay. Usually the loan term is increased a few years allowing more time to repay the loan with a lower monthly payment amount

* Forbearance agreement. The lender will agree to stop payments for a few months until your financial circumstances are better. The payments that are not made during this period of time are tacked on to the back end of the mortgage loan

* Refinance. If you have a lot of equity in the property and have had a good payment record with the lender, the lender may refinance the property to a lower interest rate or a fixed rate for a longer time period, which could lower your monthly payment

* Offer a deed in lieu of foreclosure. Here you just sign the deed over to the bank and walk away. You've avoided a foreclosure being on your record. Be sure to get in writing that the bank will not seek to obtain any additional expenses or payments from you should you take this avenue.

* Sell the property through a short sale. You can sell your property, even for less than what its worth, through this process as long as the bank agrees. If you have a buyer willing to buy your property and the bank approves the sale this will avoid a foreclosure. You will not be subject to any penalty for any difference between the mortgage amount and the selling amount.

* File for bankruptcy. This should be a last resort measure. A chapter 13 bankruptcy filing stops a foreclosure immediately. It will give you time to work out a possible payment plan to save your home if that is your goal.

* Allow the foreclosure to proceed. This is the very last choice. In some states you may be subject to what is called a deficiency judgment, which means you will have to pay the lender the difference between what it obtained from the sale of the property and what was owed. Seek the advice of an attorney or local housing counselor before you take this action.