Homeowners who are facing foreclosure often dread dealing with the facts that got them to that place. If you think back, when you bought your home, losing the home was probably the furthest thing from their mind. Few homeowners actually plan to go into foreclosure.

REASON FOR PENDING FORECLOSURE

Apart from those who knowingly participated in mortgage fraud, with the intention of never making a single payment, most homeowners face sudden extenuating circumstances that force them to stop making timely mortgage payments. Here are a few reasons:

• Job loss/ unexpected unemployment
• Sudden Illiness or medical emergency
• Death in the family
• Divorce/ loss of second income
• Excessive debt obligations
• Job demotion
• Inability to pay an adjustable rate interest that increases
• Unexpected major home maintenance expenses

The best way to avoid foreclosure is to prevent the filing of a Notice of Default, lenders do not want to foreclose, but will file a Notice of Default to protect their interests, if necessary. If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender, don't put it off.  Being embarrassed or ignoring letters from your lender because those responses will make the situation worse, not better, depending on your particular situation and hardship circumstances, the following options are available to you:

OPTION 1: Loan Reinstatement, Forebearance or Modification - Reinstatement: Your lender is always willing to discuss accepting the total amount owed in a lump sum by a specific date. You could have up to and including the morning of the auction to catch up your payments. Perhaps you could borrow from friends or family, credit cards or retirement program. Loan forbarance may accompany this option. Forbearance: The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period. A typical example - You owe $9000 in back payments, etc. Your mortgage company may accept $4500 now and $750 per month for the next 6 months. Of course, you would have to resume making your nornal monthly payments thereafter.

Modification: A permanent change to your mortgage that may lower your payments and deliquent payments, including making an adjustable rate into a fixed rate or to have your deliquent payments added to your balance, by changing the interest rate or extending the number of years you have to repay.

OPTION 2: Payoff/Refinance - Pay off the entire loan amount plus any default amount and fees. This is usually accomplished through a refinance of the debt. You've probably have received letters from mortgage brokers and lenders saying you are pre-approved for a new mortgage. The fact is that it is often very difficult to arrange financing when you're already in default on your existing moartage. Arranging new financing if at all possible will depend on your income, credir report, value of your home and the amount of equity, if any. If you should attemp to refinance, you should always have a backup plan available.. Many times, homeowners call days before the auction saying their finaincing did not go through, and then it's too late!

 OPTION 3: Chapter 13 Bankruptcy - A viable alternative if your financial situation has improved, filing bankrupcty prior to the auction will stop the sale. Unfortunately for most people, it only postpones the sale for a few months and a prepayment plan must be files with the courts. This requires the direction from your legal advisor and will affect your credit score.