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Foreclosure isn't the dirty word that it used to be. Tough economic times have made defaulting on a home mortgage an unpleasant eventuality for record numbers of homeowners who in years past would never have considered foreclosure an option. Of course, that's of little comfort when you first realize you can't make your monthly payments. The burden feels overwhelming and you're concerned about your credit rating and about the future. It may help to know that you're not alone in your worry. Your lender wants to avoid foreclosure just as much as you do.

Faced with more distressed properties than they know what to do with, banks are anxious to avoid the cost of repossessing more properties. They understand that these days, borrowers aren't defaulting on their home mortgages because they lack integrity, but because truly can't pay. This means that you and your lender are not adversaries, but partners in finding real options for avoiding foreclosure on your home. And as always, breaking the problem down helps you approach it with less anxiety.
* Contact your lender by phone as soon as you know you cannot make your mortgage payments. Don't wait until your next payment is due, or until you have missed payments. Mortgage lenders appreciate borrowers who communicate openly about financial difficulties. This demonstrates to them that you want to fulfill your financial obligations. Paying late and missing payments, on the other hand, makes it more difficult for your band to work with you.
* Assess your financial situation by listing your expenses and income. Gather your home loan documents, your property tax bills, your home owners insurance, home owners' association bills and any other regular expenses directly related to owning your home. Use these to calculate the annual and monthly costs of owning your home. Separate from that, calculate your other monthly expenses. When figuring your income, do not anticipate pay raises or bonuses. You will need all this information later when you talk with your home lender.
* Send a letter to your mortgage lender, briefly outlining the circumstances that are causing your financial difficulties. Include copies of documents your lender might need for their records. An example would be the death certificate of a homeowner who has died. Send this letter by certified mail, keeping a copy for your records. This is your documentation, should you ever need it, of your good faith effort to communicate openly.
* Ask your lender for the lowest available

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