Foreclosure and the loss of the home is the usual result. Foreclosure is financially and psychologically devastating to the stability of the household. If you are facing foreclosure on your home, you are not alone. Millions of home owners will lose their homes in the next few years. The key to avoiding foreclosure is for borrowers to face the issue head-on.

If you find yourself in a financial bind that is difficult enough to threaten the loss of your home, don't be afraid or embarrassed. Lenders are in the business of lending money. On top of that, the housing market is already slowing. In many parts of the country, unsold housing inventory is doubling, homes remain unsold for 60 days or more and stocks of home builders are down by 1/3 or more. While the number of new mortgages boomed between 2000 and 2004, foreclosure rates also hit record highs.

Their payments are based on indexes such as the prime rate that will be 3 or 4 times higher than they were when the loans were taken out. Mortgage payments will skyrocket as $1 Trillion dollars of adjustable rate mortgages adjust. The national foreclosure rate is at the highest level since the Great Depression. In spite of the adjustment caps that most of these loans have, these homeowners will see their payments jump 20-40%. Families fall behind on the mortgage payments because of illness, job layoffs, business failure, divorce and marital problems, and bad money management decisions.

Repayment Plans

If a homeowner loses a job and falls behind on the mortgage before regaining employment, then the bank may arrange for the borrower to send a payment and a half for several months until the loan is current. A loan modification changes the terms of the loan to lower the payments. Documentation of the hardship will be necessary.

Short Sale Plans

The lender will allow you to sell the home to someone and accept far less than what you currently owe on the mortgage. If catching up is not a possibility, the lender might agree to put foreclosure on hold to give you some time to attempt to sell your home. Called a short payoff because the lender agrees to cancel the note and mortgage as a lien on the home.

Deed In Lieu Of Foreclosure Plan

Many lenders will agree to this arrangement since it gives them possession of the property minus exorbitant legal fees and court costs. It might not be possible if there are other liens against the home.

When the lender allows you to give-back your property and forgives the debt. Further, request that the lender remove some or all of the missed payment reports to the credit bureau. If turning over the home is an option, contact the lender to voluntary release the deed to the property with the stipulation that the lender agrees not to start or complete foreclosure proceedings.

How To Work With A Lender Plan

Details about your current income and Although lenders do not want to foreclose if it can be avoided, they do want to make sure you can follow-through on any promises you make to bring your account current. Yet there are limits. After homeowners fall three payments behind, banks forward such cases to an attorney. But foreclosure proceedings take up to a year in most states.

Modification Plans

One solution is to add the past due amount into your existing loan, financing it over a long term. Modification might also be possible if you no longer have the ability to make payments at the former level.

Forbearance Plans

A forbearance plan is designed to bring payments current over a period of time by paying a full payment each month, plus a partial payment on the delinquent amount. The period of time during which foreclosure proceedings are stalled while possible solutions are being fulfilled.

Most lenders have a forbearance program. You must be diligent in requesting forbearance, speaking with a manager with authority to approve the plan is a must. Lenders sometimes combine Forbearance with Reinstatement if you know you'll have the funds to bring your account current by a specific date. In forbearance, you are allowed to delay payments for a short period, with the understanding that another option will be used afterwards to bring the account current.