If you’re facing foreclosure, call your lender right now to determine your options, which can include loan modification, forbearance, or a short sale.

Start reviewing all correspondence you’ve received from your lender as well as your mortgage documents, which should outline what the lender may do to start the foreclosure process. .

Determine what the foreclosure laws are in your state. What’s the timeline? Do you have “right of redemption,” or grace period which can all you to reverse a foreclosure? Will your lender requiare a deficiency judgment, holding you responsible for the difference between what your home sells for and your loan’s outstanding balance?

Call your mortgage company NOW. Call your mortgage company and ask for the loss mitigation department. You might stay on hold for a while. Once a live person answers the phone, take as many notes as possible confirming their name, department the time and date of the conversation. Write down everything.

The next call should be to a foreclosure avoidance counselor approved by the HUD  ( Housing and Urban Development). Often times these counselors don’t charge a penny. They should explain your state’s foreclosure laws, discuss alternatives to foreclosure, help you organize financial documents, and even represent you in negotiations with your lender. Beware of scams, that offer to help, these scams unfortunately have become rather common. 

Be sure to let your lender know that you’re working with a counselor. Not only does it demonstrate your good faith.  Homeowners who receive loan modifications with the help of a counselor also reduce monthly mortgage payments by $454 more than homeowners who receive a modification without the aid of a counselor.

Look for options that will allow you to keep your home, like a loan modification that reduces your monthly payment. A modification can lowering the interest rate, changing a loan from an adjustable rate to a fixed rate, extending the term of a loan, or eliminating past-due balances. Another option, forbearance, can temporarily suspend payments, though the amount will likely be tacked on to the end of the loan. I have dealt with several homeowners who have successfully negotiated both loan modifications and forbearance. Just don’t give up!

If you are still unable to make the payments, and a sale isn’t possible because you’re upside down, then consider a shoret sale. A short sale is when the proceeds are less than what’s still owed on your mortgage. A deed-in-lieu of foreclosure, which amounts to handing over your keys to your lender, is another possibility. The earlier you talk with your lender the better.