Facing Foreclosure? Take These Steps

If your lender doesn't hear from you and you stop making payments, it could assume that you have already decided to walk away and will begin foreclosure proceedings as soon as it can, in order to cut its losses. If you contact your lender before missing the first payment, then the lender will likely be much more receptive to whatever problems you are having by the mere fact that you have taken the initiative to work out a solution.

While your lender won't be able to work miracles, it will be much more willing to negotiate a loan modification if you can show that you are taking the needed steps to correct the cash-flow problem and will be able to continue to pay your mortgage in exchange for some immediate help. If you are in need of a negotiation because of an unexpected hardship, you will need to show proof of this. If you do negotiate a loan modification, be sure to document all conversations with the lender, who you spoke with and the terms of any agreements. This will help ensure that the terms aren't changed on you over time.

If negotiations don't work with your current lender, early action also gives you the option of trying to find another loan. While this may be difficult, you have a much better chance of securing a new loan if all your mortgage payments are current. If you have missed any of them and foreclosure proceedings have been initiated, it will be nearly impossible to find any other lenders willing to make you a new loan.

3. Form a Plan

Before you rush off to cut as many expenses as possible and look for a second job, take the time to sit down and form a comprehensive plan on how you are going to manage to make the mortgage payments over the long term. If you can't come up with a viable plan to reliably make the payment each month, then you likely have more house than you can afford. In this case, don't bother cutting expenses to the bone or looking for additional work, because this will only delay the inevitable.