How to Avoid Foreclosure

Foreclosures are suddenly a hot news topic. A permanently stalled recession has combined with higher mortgage payments and lower job opportunities to create the perfect foreclosure storm.

So how does the average homeowner avoid becoming another statistic?

Everyone interviewed for this article agreed on two indisputable facts: Financial institutions don't really want to take back a house, and the earlier a homeowner seeks help, the better off they will be.

The type of help, however, will vary, based on each individual's situation. "It's not quite cut and dried," explains Mary Burks, a certified Credit Counselor with Consumer Credit Counseling Service of the East Bay. "It depends on why the homeowner is falling behind." Burks tries to help clarify why the financial trouble exists, and if feasible, help them cut back.

"People aren't always willing to cut back on cell phones, on cable, eating out. I have to explain to them that this isn't for the rest of your life, but for now. I also ask them, �Are you really willing to give up your house for your cable television?' That usually wakes them up."

Other situations, such as a job loss or health issue, are a bit more complex. Whatever the situation, however, Burks says contacting the lender is crucial. "The first thing they should do is contact the mortgage company and let them know what has happened. Early communication is the key. The lender has to overcome their shame and embarrassment." Burks says, often, "They'll wait until it's almost too late -- when they're getting a Notice of Default -- rather than asking for help as soon as they first fall behind in their mortgage payments."

That exhortation is echoed by Christine Richey, Vice President of Lending at UNCLE Credit Union, which has branches throughout the Tri-Valley area and beyond. "We encourage them to meet with us. We like to sit down with them and go over what's coming and what is going out. We find out why they are struggling. Maybe somebody lost their job. Maybe they ran up credit card debt."