The real estate market is hurting. If you find yourself more strapped for cashavoid foreclosure than usual, you’re not alone. The recent financial downturn was in no small part due to an overload of debt on the shoulders of the American people. One of the biggest debts you probably hold as a private citizen is a home mortgage. It’s no surprise that homeowners began defaulting on their mortgage payments in droves when the market crashed. When the cash stops flowing, it becomes impossible to keep up with bills like home loan payments. Subprime lending practices made matters far far worse. Most homeowners who were trapped in these subprime loans didn’t even realize that their mortgage rate was adjustable. So when the economy tanked and banks started jacking up mortgage rates at an unprecedented pace, otherwise solvent homeowners were caught off guard. If you count yourself among the millions of homeowners facing foreclosure, there are a few things you can do to halt this painful process.

Request more time from your lender

When a home is foreclosed upon, the lender loses money as well. Most lenders who begin the foreclosure process have made an economic calculation that they are likely to lose more money not receiving mortgage payments than they will on the foreclosure. But this is not always the case. Contact your lender and explain your situation. If you have a reasonable belief that your lapse in payment is only temporary and that you should be receiving more income shortly there is a high probability that the lender will grant you an extension rather than have you removed from the property.

Seek forgiveness

Not in the religious sense, of course. For the same reasons described in the previous section, some creditors are willing to forgive a portion of your mortgage debt rather than absorb the guaranteed loss of a foreclosure. Chances are your mortgage lender has been hit just as hard by the recession as you have. Take a shot and see if you can have part of your debt forgiven in exchange for an agreement to continue paying a lower monthly amount.

Take out another loan

I know the prospect of more debt is scary, but there are government programs out there that will allow you to take out another loan to assist in repaying your mortgage. Do your research to see if you qualify.

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This is filed under Foreclosures.

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