Due to collapose of subprime mortgage market in August of 2007, many homeowners are facing foreclosure. The reason so many homeowners are facing foreclosure is myriad: jolt of an Adjustable Rate Mortgage soaring to double monthly payments, job layoffs, medical setbacks, to name a few. Most homeowners have never been on the edge of losing their home before and they are receiving damaging advice from friends and family who advise authoritatively on matters they really know little about. This whole process seems so overwhelming that they make many mistakes and just quit fighting for their home, and when you stop fighting for you home you can't stop foreclosure and devastating your credit. Are you one of these homeowners? These 5 mistakes and how to overcome them will allow you to either stop the foreclosure or at least save your credit rating.



1. DOING NOTHING. This is the biggest mistake. If you don't start fixing the problem, you won't determine a solution that works in your favor. Many homeowners facing foreclosure are paralyzed in fear of the calls from the collection department and just let the foreclosure process take over, giving up their homes without a fight. You need to study up on your options, make a plan and follow it up. There are many options for you which will make life easier in the long run if you do some research yourself and then approach a professional to assist them in stopping a foreclosure.

2. TALK TO LOSS MITIGATION, NOT JUST COLLECTIONS DEPARTMENT. Contacting regular mortgage staff instead of Loss Mitigation Department is another common mistake. The collections call you received from the bank are from operators trained in collections only and departments are not in communication with each other. They will ask you things like "Can you borrow money from somewhere else?" Guess what? No, you are already stretched to the last penny, so no, there are no more options! The collectors are only looking at bringing your loan current. If you borrow more to make a payment you can't afford you'll only end up that owing more people money you cannot pay back. You need to tell the collectors that you need the number to Loss Mitigation Department, they might be hesitant, but keep politely insisting for the number to Loss Mitigation.

3. NOT RESEARCHING CHOICES BESIDES A FORECLOSURE. DO NOT leave your foreclosure process or workout completely in somebody else hands. There comes a point you might hire a professional to help you with the process. It might be an attorney, real estate agent or some other type professional. This is where your research and study is very important. That real estate agent might tell you they handle short sales, but if you researched and asked the agent a few key questions you will know right away. So research and study, the effort could save you tens of thousands of dollars and up to 300 points on your credit score.

4. DO NOT MOVE FROM YOUR PROPERTY WHEN FACING FORECLOSURE. There are so many houses in foreclosures right now that the mortgage companies cannot keep up with them. The mortgage companies are not landlords, they know how to give out loans, but they are not land owners. When you leave your home the yard overgrows, a sure sign to vandals that the house is empty or if a water pipe burst who going to stop the water. Staying in the house until a solution is found could save you thousands of dollars in monthly mortgage payments. You staying physically on the property is of value to the mortgage, even if you cannot make mortgage payments you are preventing vandalism and providing care and maintenance of the mortgage company's investment. Foreclose is not a single act, it's a process that could take many months, ultimately saving you those months in mortgage payments. In fact one of the first questions two questions mortgage companies ask you almost immediately are: do you plan to keep the property? Are you living in the property?

5. THINKING YOUR HOME IS WORTH WHAT YOU PAID FOR IT. Because your mortgage company paid for the assessment, it undoubtedly came in as worth the asking price or above. But that is not an indication the home is worth what you paid for it two years ago or four years ago. Guess what? The Mortgage lenders and the subprime folks are part of the reason we are in this mess right now. The mortgage industry perpetuated the All American Myth that real estate always increases in value, is a sure-fire investment and made loans to people statistically known to have to have a very low probability of keeping the mortgage current, particularly if an adjustable rate came by to increase the payment sometimes doubling it. WRONG. The mortgage crisis is not new, the US experienced the same set of problems in the 1980s, resulting in some of the protection methods now in place to protect homeowners in 2008. Take the hit on the value and save your credit so that you can buy an affordable a house in a year or so versus seven years from now when filing bankruptcy or paying 2 to 5 interest points higher after going through foreclosure.

In in nutshell, invest a few dollars now on educational materials to guide you on how to stop foreclosure, to inform you of your rights, and to protect your credit rating from unnecessary damage. Then make a plan. Do you save your home or look at a short sale? Then put your plan in action. Just taking these steps alone will relieve some of the stress your feeling right now. The process will take time, but then the hard part of stopping foreclosure is finished in a day or two, then it's a waiting game for the bank to process it and keep track of the process.