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Foreclosure are you in trouble with the banks?

Foreclosure rates are skyrocketing and millions of Americans are facing the very real possibility of losing their home. Many homeowners are choosing to walk away from their house because they can no longer afford to pay high-interest mortgage notes on real estate which is now worth less than it was when they purchased it.

Foreclosure is also affecting numerous unsuspecting tenants. Oftentimes, homeowners rent their distressed property in hopes of being able to retain their property. If they end up losing their home to foreclosure, tenants are forced to move and generally end up losing their security deposit and advanced rent monies.

Considering the current state of affairs, it might be difficult to believe you can save your home from foreclosure. However, it is important to realize that there are methods to stop foreclosure proceedings as long as you become proactive.

Homeowners who have only missed a payment or two have more options available than a homeowner who has received an auction notice from the Sheriff's Department. However, until a judge proclaims your home is foreclosed, you still have an opportunity to alter the outcome. If you are currently delinquent on your mortgage payments, now is the time to contact your lender.

When real estate is entering into foreclosure, a bank loss mitigator is assigned to handle the loan. When contacting your lender, ask to speak to someone in the Loss Mitigation Department. Explain to the loss mitigator that you want to keep your house out of foreclosure and would like to know what options are available.

Depending on the delinquency of your mortgage and the repayment plan you can offer, the bank may offer a loan modification. When loan modifications are provided, the lender generally rolls over delinquent payments to the end of the mortgage note. This is the easiest way to get back on track and avoid foreclosure.

If you have missed two or more payments, it is best to prepare a repayment plan prior to contacting your lender. Organize your paperwork and calculate your income and expenses. The biggest mistake you can make is to offer your lender a repayment plan you cannot adhere to.

When mortgage lenders are unwilling to negotiate, there are still options available to stop foreclosure. Homeowners with FHA-insured loans can obtain assistance from the Federal Housing Administration. FHA counselors are able to review your finances, determine available options and assist with lender negotiations.

Borrowers unable to avoid the foreclosure process have options which help reduce the impact on their credit report. These include a short sale and deed-in-lieu of foreclosure. Using a short sale, a lender agrees to accept less than is owed on the mortgage note if the property is sold within a specified period of time. Short sales generally require the assistance of a qualified realtor and a sales agreement must be provided in the short sale package required by the lender.

Deed-in-lieu of foreclosure requires the homeowner to give their property back to the lender. They lose all monies paid into the property. While deed-in-lieu does not prevent foreclosure, it is less detrimental to the borrower's credit rating.

Although forlosure can be quite frightening and intimidating, it is important to keep in mind there are options available. No one wants to lose their home, but in some instances foreclosure is the better choice in the long run.