by Helen Richardson

Created on: March 07, 2007   Last Updated: February 16, 2010

When your home goes into foreclosure, the lender puts an ad in the paper letting people know that your home will be auctioned off on a certain date. Suddenly you get ten notices in the mail from various lawyers and so called "nonprofit organizations" who all insist that they can help you.

These people look at the foreclosure notices in the paper every day and send out notices to everyone on the list. Be careful in dealing with any lenders or non profits who claim that they can help you.

Many agencies who claim to be non profits charge people on average $1500.00 to either work out a repayment plan or a loan modification with a lender. They claim to have special connections and to know who to call and what to do. They claim that they can get things done faster and that you need them to work anything out with your lender.

If you want to pay $1500 to have someone do that for you because you don't have the time or you just don't want to deal with it anymore, go for it. But personally, I think its a huge waste of money.

The lending companies know that the housing bubble has burst, the economy is bad and so many people are defaulting and having their homes foreclosed on that they are more than willing to try to work with you to save your home. If you just got behind because of a temporary problem but you are now able to make your regular payment, you may be eligible for a loan modification. A modification is when they take the back amount you owe and put it on the end of the loan. It is sort of like doing a refinance, but your payment will stay the same. Obviously your loan is going to take longer to pay off since you have the back amount at the end of it.

The other option that you can ask for is a repayment plan. If you can show that you got behind because of a problem that doesn't exist anymore, and that you can pay the extra amount for a certain number of months, they will more than likely work with you.

The truth is that under normal circumstances, banks lose money when they foreclose. Its difficult enough to sell a home when you're motivated to sell. When there is no one in the home to fix things up and make it look nice, the home will sell for much much less than its worth. The less equity you have in the home, the more money the bank will lose. So if you don't have a lot of equity, it is actually to your advantage in this case.

Now that so many people are foreclosing and the housing bubble has burst, foreclosed homes are going to be a dime a dozen and I predict

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