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The housing market is in the pits right now with many homes in foreclosure and practically no loans being made to finance new home purchases. 97.2% of home mortgages are O.K. Paid as agreed. But the 2.8% balance amounts to over 1.5 million mortgages!

Many people are facing a real or potential foreclosure problem. They don’t teach you how to deal with this in school; you will need to study and educate yourself as to what are your alternatives.

Being late on a mortgage payment or actuallly missing one is not the end of the world. It does not mean that you will automatically lose your home. There are many ways to avoid foreclosure and its problems.

The good news is that some of the bad news from the housing market actually helps you to avoid foreclosure. You see, with many houses already foreclosed and joining a growing inventory, waiting to be sold into a very soft market, lenders are not at all eager to foreclose more houses and make their problem even larger!

Lenders recognize that many of their problem mortgages are for amounts greater than the current market value of the underlying collateral, the house. They recognize that they are going to lose money. So they are NOT insisting on full payment or nothing.

Lenders now realize that if the house is mortgaged for $300,000 and comparable properties are selling for $250,000, that they are not at all likely to get all their money back. So if $250,000 is the fair market value, their best alternative might be to “short sell” the property to the present owner for $250,000 and finance 100% of that.

Otherwise they are likely to incur additional costs. Costs like legal and other costs of foreclosure, real estate brokers’ fees to sell the property and maintenance costs while the house stays empty and on the market. If the property does not sell rapidly it may very well deteriorate and depreciate more.

It could very easily get to the point where the property is no longer worth the $250,000 that an occupied, well-maintained house would normally bring. The homeowner can use this fact to re-negotiate and prevent foreclosure.

There are many ways to avoid foreclosure. If you find youself to be at risk for foreclosure you should make it your business to know what these alternatives are and how they work, for your own security.

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