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Guidelines to Prevent Foreclosure


It can be scary and intimidating to think about talking to your lender.  However time consuming and tedious it may be, answer their phone calls and respond to their letters. Most lenders, especially in this economy, have programs in place and are willing to work with you if you communicate with them. Be calm, be patient and open to discussing your situation.


Collect your financial information and share it with your lender. They will want to know:

  • Why you are having trouble making your payments
  • When you will be able to bring your mortgage current
  • Do you plant to keep your home or are you trying to sell it
  • Is your shortfall situation short or long term
  • What is your current income
  • Details of your monthly expenses – utilities, insurance, entertainment, credit card payments, car payments, education…

Without this information they are much less likely to be able to help you.


The Federal Government and private lenders have programs in place to help homeowners in jeopardy keep their homes. You may qualify for one of these programs. Ask your lender what programs you qualify for. Should you not qualify for any of today’s programs keep asking. New programs are constantly being developed.


Do not abandon your home! If you move out foreclosure proceedings will move more swiftly.


Hiring a middleman is one sure way to spend money you don’t have. 99% of these middleman who charge a fee are scam artists. You are better working with your lender yourself. There isn’t anything you can’t do yourself that they claim to be able to do.


Keep talking to your lender. Apply for a modification. If you are denied a modification, ask your lender if you qualify to short sale.

Help A Home Tips:

1. Write A Hardship Letter

Your hardship letter is your foundation of communication with your lender and the first step in preventing foreclosure. Here you explain changes in your financial situation, what you are doing to solve the problem, and how your lender can help you in preventing foreclosure. You are laying the ground work for a successful negotiation so you and your lender can avoid foreclosure.  Receive Free Hardship Letter Samples Today.
Hardship Letters are necessary when apply for a mortgage modification, forbearance, rate reduction, principal reduction, etc. All of these tools can help prevent foreclosure or at least slow down the foreclosure process.  A letter of hardship is the key communication tool for a homeowner who is trying to keep their home from foreclosure. Mortgage lenders receive thousands of requests for mortgage modifications every month. Without a properly written hardship letter you will most likely be denied. Take great care in developing your letter.

  • Do not send a long, overly detailed hardship letter
  • Do not hand write your hardship letter
  • Be honest but remember, you do not have to share every detail about your hardship
  • If you provide unnecessary information or poorly worded descriptions your hardship letter may trigger negative reaction from your lender
  • Be Specific. You want to request certain terms of assistance such as forbearance, rate reduction etc.
  • Receive Free Hardship Letter Examples from Help A Home Today

2. Apply for Forbearance

Forbearance from your mortgage lender could mean 3 to 6 months without payments, therefore delaying foreclosure and allowing you time to get back on your feet. Forbearance is helpful, especially if you are faced with short term loss of income or a large unexpected expense. Your pre-foreclosure situation may qualify you for forbearance because of a work injury, job loss,health or other reasons.  Hardships qualify you to receive forbearance when utility bills, food and medical costs may require your entire disposable income leaving loans and credit card bills at risk of entering delinquency. You will want to apply for forbearance when you face foreclosure on mortgages or legal action on unpaid personal loans.

Be careful when applying for forbearance with your lender.  Be very careful how you present your situation.  Do your homework and find out what your lenders requirements are in order to qualify for forbearance.  They have certain restrictions that can surprisingly disqualify you.

If you have already been denied it is not to late to apply again.  Most people do not realize they can re-apply.  Mortgage lenders realize your situation can change from day to day.  Most will let you re-apply even though you have once been denied.

3. Apply for a Mortgage Modification

When borrowers get in trouble they can’t make loan payments. The bank is left with a few options that are ugly for everybody. Often, the best option, even for the lender, is loan modification.  Mortgage loan modification is a process where the terms of a mortgage are modified outside the original terms of the contract. In general, any loan can be modified. Mortgage loan modifications allow the bank to make loan payments more affordable for borrowers. A loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments. When approved for a mortgage modification your lender offer you better interest rates, loan terms, loan balances, or other parts of the loan agreement.  A loan modification is designed to help you get current on your payments and keep your home.

Mortgage lenders have strict qualification guidelines that allow or prevent you from qualifying for a mortgage modification.  If you understand what they are looking for you can outline your plan to achieve their requirements and qualify for a modification.  They have secret formulas and requirements to meet when applying for a mortgage modification.  Some people are not aware of the fact they may actually qualify or they have applied and been denied for a small, simple overlooked reason.  Most mortgage lenders do not even share the reason(s) for not qualifying. They leave you lost in the dark wondering what happened.  The lender then proceeds with the pre-foreclosure process. If you have been denied a mortgage modification you can reapply when your situation has changed and now meets their requirements. Do I qualify for a loan modification?

Helpful tips when applying for a modification:

  • send documents for overnight delivery using FedEx/UPS or use a high quality fax machine to send required documents (standard fax machines may be hard to read – especially bank statements)
  • call your lender 2-3 days after sending documents and confirm they received and can read all the pages
  • ask how long your application will be pending or when your application will expire/time-out
  • call your lender at least once a week to check on status of application

Do I qualify for a loan modification?

4. Real Estate Short Sale or Quick Sale

Anytime a home owner can no longer afford to make their house payments and the home’s value is less than what is owed, a real estate short sale should be considered. You do not have to be behind on your payments to request a lender to approve a short sale.  You will need to be working with a qualified short sale Realtor.

If you have equity in the home you may want to consider a traditional home sale.

A real estate short sale has advantages to both the lender and the borrower. For the bank, the short sale usually results in a cost savings, as it will avoid administrative and foreclosure costs. For the borrower, especially if able to convince the bank to refrain from placing a derogatory mark on credit reports, a short sale may enable the borrower to save their credit rating and no longer obligate them to pay anything further on the property. A short sale is less traumatic than the emotional impact and social stigma of a foreclosure.

In a real estate short sale the banks pays the short sale real estate agents commissions and closing costs associated with closing the short sale provided they approve the short sale. So if you’re concerned that you don’t have the money to pay the short sale agents commissions don’t worry. The biggest issue is to help you figure out what to do with your house and find the best representation possible.  You will need to find an experienced and qualified short sale agent/realtor to assist you through the short sale steps.  If it’s in your best interest to do a short sale, than get going with the short sale!  Learn More about short sales and working with the right short sale Realtor…

5. Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a potential option taken by a mortgagor (a borrower) to avoid foreclosure under which the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith.

Your lender may be willing to consider a deed in lieu if:

SHOULD I BE AWARE OF ANYTHING ELSE?Yes! Be especially alert to the following:

Phony counseling agencies
Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These are services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services, call a HUD-approved housing counseling agency. Do this before you pay anyone or sign anything.

Equity skimming
In this type of scam, a “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.


  1. Don’t lose your home to foreclosure and damage your credit history.
  2. Explore every alternative to avoid foreclosure; modification, forbearance, short sale…
  3. Call or write your mortgage lender immediately and be honest about your financial situation.
  4. Stay in your home to make sure you qualify for assistance.
  5. In a short sale make sure you are working with a qualified and experienced short sale Realtor.
  6. Arrange an appointment with a HUD-approved housing counselor to explore your options.
  7. Cooperate with the lender, counselor, agent trying to help you.
  8. Beware of scams.
  9. Do not sign anything you don’t understand. And remember that signing over the deed to someone else does not necessarily relieve you of your loan obligation.

Act now. If you do nothing, YOU WILL LOSE YOUR HOME and your good credit rating.

Short sale or foreclosure?
How does the short sale process work?
How can I find a qualified short sale Realtor?
Do I qualify for a loan modification?