Do you know that it costs a lender $30,000-$50,000 just to take a house back in a foreclosure? If they have already lent more on the property than it is worth in the current real estate downturn, you can see why lenders don't want to foreclose on your house. Not only are lenders not in the business of owning homes, but it costs them an enormous amount just to take control of it. This means that homeowners going in to foreclosure situations are in a stronger position to negotiate and either hold on to their home, or get out of the situation with much less damage than most people think.

The lender plays tough. Many times they tell you to pay up or they will drag your life through the dirt and leave you with nothing on the other side. This is actually not true- it is certainly not true if home owners pull their heads out of the sand and ACT in the face of fear. There are a lot of options for you before you lose it all and your credit along with it.

There are more options for people who can not make payments than most experts tell you about. Banks do not want to foreclose. If they can keep you in the house paying your mortgage, even a modified mortgage, it is much better for them than completing the foreclosure process. Or, if they can get even a part of their money back at a sale, they are better off than spending $30,000-$50,000 on a foreclosure that will leave them with a reduced market price. They want to help you, whether you are an investor or a private homeowner.

Recently, one expert in the field told me that lenders on a second mortgage feel lucky to get 10-20 cents on the dollar they lent you. That means they will take as little $5,000 for your $50,000 loan and call it even! They will negotiate with you so that you all loose a little, but no one looses it all. Here is the catch: you absolutely MUST start acting and expend the time and energy to collect the information and talk with the people who are likely calling you asking for payment. Now is not the time to put your head in the sand and start hoping for the best. Now is the time to get in action and understand your options entirely. You can always contact the author for more information.

(The second mortgagor can technically take you to court to collect, but the reality is that in most states they have to prove not only that the property really was worth the loan, but that you maliciously walked away with their money. That is hard to prove is not worth their time and money in most states.)

The best option for you may be to list the property with a 'short sale' expert. That expert can negotiate with the lender to list a property for less than is owed. These experts do not charge the homeowner, but charge the lender. Then they list the property and sell it to someone looking for a good deal. When it sells, it impacts your credit for a far shorter period than a foreclosure. In other words, after a short sale, a homeowner can buy a house at a reasonable interest rate again in as little as 18 months. With a foreclosure on your record, it takes 7 years to be able to buy a house again at a reasonable rate of interest. What a difference a short sale can make!

When you are in the foreclosure process, you will get lots of offers of help. Different pre-foreclosure experts, investors and real estate agents will mail you letters when your foreclosure information is made public, as it is in most states as you enter the foreclosure process. As with any important decision, it is important to talk with at least three different people and always ask for references. You don't want to stake your future on a fly-by-night operation.

When you are in the depths of financial difficulty, it is hard to think straight. It is sometimes hard to think about the details of your hardship. It is absolutely imperative that you think about it enough to find the right person to help you. Then you will want to understand all the implications for you over the short- and long-term. Never sign something over to another person and hope for the best until you have thoroughly checked references, checked on the with the Better Business Bureau in that state (you can do this on line) and feel comfortable with the process that your situation will be taken through.

Another great resource? Legal Aid in your state provides free or low-cost legal advice based on need. Just make sure you are working with someone who has done this before.

More info on your stop foreclosure information search:

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