As interest rates have risen nationwide, and the real estate market has begun to stagnate or drop, foreclosures have become a rising problem. While there are many resources available for homeowners to save their homes, there are just as many scams out there. Many of these scam companies offer to help homeowners work with their lender to establish a repayment plan. In nearly every instance, unfortunately, these companies are only providing clients with options that they would be better off doing themselves.

However, most homeowners are drawn in by these scams because they are too unnerved by their current situation to contact their lender. They are afraid of admitting their failure, and are easily tricked into asking for help. The purpose of this article is to show homeowners in foreclosure how to approach their lender when attempting to work out a solution.

How to Contact Your Lender

Your very first question when facing foreclosure may be "Well, how do I contact the lender the first time? I've been ignoring their calls for months, and now I have to let them know I'm not a deadbeat. They won't believe me if I just call them and tell them that." You're right, they probably will not believe you if you first ignore their calls for months and then call them and say you intend to solve the problem.

But as hard as it may seem, you should call them and let them know you are determined to keep your home and repair your reputation with them. Ask for the representative who is the point of contact for your file, and speak with him or her personally. You may have to leave a message, or several messages, before you receive a call back. In order to save your home, you will need to exercise persistence. Keep attempting to get in touch with a decision maker from your lender.

This is a great time to start documenting everything. Write down the date and time whenever you attempt to contact your lender or their attorneys. Also make sure you write down the name of who you talk to, and what you discuss; if you leave a voicemail, write down the contents of the message. If at all possible, record every conversation you have with your lender by using a tape recorder, cell phone that can record conversations, or a computer. In the event you have to speak with a judge about the case, you must be able to show proof that you have tried working out a solution.

The more work you have done to help yourself, the more the court system will sympathize with your situation. In many cases, the courts can allow you additional time to become current on your mortgage. They can even override the lender's process of taking your home, reverse the foreclosure, or rescind the sheriff sale.

Also, request the lender's representative's direct fax number, and send a letter which states your intention to keep your home and your request for them to help you examine options to get you out of foreclosure and caught up on your mortgage. You will have to ask your lender what programs they offer, since they are not required to inform you of them.

Make absolutely sure you do not delay on this very important step in saving your home. If you are unsure what to include in the letter, you may want to review some sample letters to lenders. Depending on your situation, one or more may be appropriate for you to send to your lender in the next few minutes. Just customize any letter you find for your situation and send them directly to your lender as often as is necessary. If you think additional information will assist them in understanding your situation, send that, as well.

Figure out Your Lender's Plans

Your next step should be reading up on as much information about your state's foreclosure laws as you can. Only in this way can you figure out how your lender will attempt to take your home from you. The most important detail you want to find out at this stage is how the lender can pursue the foreclosure. In order to sell your home at a sheriff sale, do they have to sue you and prove in court that you are in default? Or did you authorize them to sell the home if you fell behind?

If you are thinking that you would never willingly authorize the lender to sell your home out from under you, you need to find your original loan documents as soon as possible. The documents may contain a clause that lets your lender sell your home right away if you go into default. This clause is called a "power of sale" clause, and can be used in states that allow a Non-Judicial Foreclosure process.

The main difference between Judicial and Non-Judicial Foreclosure is the procedures the lender must follow to take your home. Judicial procedures require the lender to sue you in court, prove that you are in default of your loan, and obtain a court order allowing them to foreclose on the property and sell it. Non-Judicial procedures allow the lender to publish their intent to sell the property, and then sell it at auction.

Examine the state foreclosure laws listed on our website or other sites online to find out if your state uses Judicial or Non-Judicial Foreclosure procedures, or both (for even more information you may want to visit your state's official website). For states that use both methods of foreclosure, you will have to examine your mortgage documents to locate the "power of sale" clause. A small number of states allow a Strict Foreclosure process, whereby the lender can prove your default in court and immediately be awarded title to the home; there is no formal foreclosure process and no sheriff sale.

Once you have briefed yourself on your state's foreclosure laws and examined your loan documents, you will be more informed than the vast majority of homeowners facing foreclosure. You will also be aware of the specific procedures the lender must follow if they intend to take your home. This knowledge, plus your diligent documentation of your attempts to contact your lender, puts you in a position of strength for the first time since missing a mortgage payment. You should now be ready to begin assessing your situation and determining the best solution to foreclosure.

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