For most people, the possibility of facing foreclosure is emotionally stressful and confusing.  Many people don't know where to turn or who to talk to for help.  Here are some common steps you can take to prevent foreclosure.  It is important to become familiar with your loan documents and applicable state laws.  The most important thing to do is TAKE ACTION!

You have several options to stop foreclosure. Some cost money and some are free.

1.  Contact an attorney - The laws have recently changed to help struggling homeowners.  Foreclosure attorneys should be familiar with these changes.

2.   Negotiate a Repayment Structure Yourself - This is definitely the cheapest way, but can be frustrating if your lender doesn't have a helpful "loss mitigation department" or a "hardship" program. It can be viewed the same as if you were going to fix your own car. First you have to learn about the car, then fix the car. As with car repair, most people would rather hire a specialist to handle their financial affairs.

3.  Foreclosure Mediation - Probably the most popular and common with people who can't pay all the past due mortgage payments at once. This service negotiates with the lender to move those payments to the back of the loan (pending you have the proven income to make the current payments). It is essentially like getting a grace period.

4.  Deed in lieu of foreclosure - This is where you realize that you can't pay for the house and you voluntarily give the house back to the lender. This still is subject to a deficiency judgment yet counts as a "less serious" foreclosure on your credit.

5.  Sell your house - This is a great way if you feel you can get what you owe out of your house. Remember to include the standard 5% - 6% Realtor fees when calculating your take home. You can negotiate the buyer to pay some of the Realtor fees, but it is rare.

Links to Helpful Resources

http://www.knowyouroptions.com

 HUD Foreclosure Resource: 

 http://www.hud.gov/local/il/homeownership/foreclosure.cfm

Facts for Consumers by the Federal Trade Commission:

http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

Summary of Housing and Economic Recovery Act 2008:

http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf