Facing Foreclosure? Take A Deep Breath And Don't Panic

The ongoing subprime meltdown will claim its next victims in October, when adjustable rate mortgages worth over $50 billion reset, but homeowners facing foreclosure can keep a roof over their head by following a few common-sense tips. Above all, don’t panic, and don’t ignore the problem – instead, try the following:

  • Reason With Your Lender: Ask and ye shall receive. Explain your situation, and ask for a lower or fixed rate, or more time to pay off the mortgage. As the subprime market implodes, lenders are trying harder than ever to retain paying customers.
  • Call A Counselor: Counselors can help delay foreclosure – sometimes for up to a year – but only if you give them ample time to negotiate with lenders.
  • Lawyer Up: As a last resort, a lawyer can help you file for Chapter 13 bankruptcy, which forces lenders to negotiate a payment plan. Lawyers can also help borrowers who had little chance of repaying truly outrageous loans sue the lender for violations of the Truth in Lending Act.
  • Be careful if you choose the legal route, as Chapter 13 can hurt your credit score, and a failed suit against a lender can put you further in debt by making you liable for attorney’s fees.