More than 50% of foreclosures would be avoided if people contacted their lender. So be proactive and aggressively pursue all options you have because you do have quite a few tools you can utilize to mitigate as much loss to you, your credit and your family.

If your are short on time and you cannot do it on your own, then please seek help from a Non-Profit HUD approved Housing Counselor, an attorney or a legit for profit that can handle the calls and paperwork for you.

There are quite a few ways that a homeowner can stop foreclosure. I thought I would list them here with some brief explanations.

1. Loan Workout - A loan workout is when you negotiate with your lender any kind of plan that will benefit both you and the lender when you are delinquent or in default. This is a broad term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, forbearance plan etc.

2. Loan Modification - This is when the lender modifies your current mortgage in order to work with you and make your mortgage more affordable. In the past this was only used when a borrower was delinquent but now it is being used before someone is delinquent. This will be the hottest term and way to help people avoid foreclosure.

3. Forbearance - This is used most of the time, when a Notice of Default has been filed. You are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions.

4. Short Sale - This is used when all negotiations for a loan workout have failed and you are upside down on your mortgage meaning you owe more than it's worth. The lender basically agrees to cooperate in the sale and take a loss. You place the home for sale and any offers are presented to the bank. Unlike a traditional sale when the homeowner decides what offer to take. The bank controls the negotiations and the homeowner has no say in the process. It's a last ditch effort to save someone's credit from a foreclosure filing.

5. Foreclosure Bail Out Loan - Is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage and it is common for interest rates to approach 10-15%. Points can be as high as 5 and terms are usually short. In the 5 year range where a balloon payment will be due for the remaining balance. In order to qualify you must have sufficient equity. Hard money lenders are looking for 65-75% max loan to value and a decent equity cushion. You also have to have ability to repay as in a traditional mortgage.

6. Deed-in-lieu - is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower. Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

For more information about foreclosure and loan modification please visit www.legalloanbailout.com.