Contact your Lender before it's too Late

It just keeps going from bad to worse. According to an article in USA Today a few years ago, several hundred-thousand Americans lost their homes to foreclosure in the then-previous year alone. But, given the current economic climate in which we live and the daily headlines that we've been bombarded with recently, that isn't necessarily a surprising fact. But you may be shocked to hear this interesting tidbit of information: half of them never even tried to talk to their lenders.

Today, the rate of foreclosure among homeowners has increased by almost 80 percent. This is a truly astounding number, and fears abound that it may indeed rise even further. Bloomberg.com estimates that – as early as March of 2009 according to realtors, economists, analysts and a Federal Reserve governor – as many as 1.5 million more Americans could lose their homes, a further 100,000 people employed in housing-related industries could lose their jobs, and a projected 100 additional sub-prime mortgage companies that lend money to people with weak or bad credit may go under.

These projected statistics certainly paint a bleak picture. Nevertheless, all is by no means lost. If you've fallen behind on your mortgage payments or cannot pay at all (or you feel in danger of doing so), call your bank or lender immediately and let them know that your payment will be late. Advise them candidly of your changing financial situation. If refinancing is a viable option for you (i.e., one that will lower your payments to an affordable level), by all means consider it – but do so only with great care and with your eyes wide open. Engage the services of a financial planner to assist you, if need be. Or, if you've attained 'senior' status, you might even look into a reverse mortgage.

Keep firmly in mind that the last thing a bank really wants to do is to foreclose on your home. Even in good economic times, foreclosures create problems that banks simply aren't set up to smoothly deal with. And, with the sub-prime mortgage crisis causing financial losses hand-over-fist, banks can ill afford to take in additional bad mortgages. Knowing this, the best thing that you can do is to open up a dialogue with them to see if you can arrange a mutually suitable payment schedule, negotiate a reduction on your loan's interest rate, or come to an agreement for a change in other terms that will help you to meet your obligation.

The fear of defaulting on a mortgage has many homeowners under tremendous stress and in an almost constant state of anxiety. But, know of a certainty, the absolute worst course of action that can be taken is to adopt an attitude of silence toward the creditor. If you find that you may fall short in paying your mortgage, contact your bank or lender as soon as possible to discuss your situation and all possible options. You'll likely find them quite appreciative to hear from you, and there's probably a good chance you'll be able to find a common ground that's satisfactory to both parties.