The "F" word in real estate circles is this: Foreclosure. For realtors and real estate investors this can mean opportunity, but if you are the family that is faced with it, dread and despair. Well, I am here to tell you that it does not have to be a despairing situation that totally cleans you and your family out. There are solutions.

First of all let's start by defining what it means to be foreclosed on. It is the legal process in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien." To put it simply, it is when someone gets into a house and cannot make the necessary payments.

So what if you have already gotten into a situation where you may be facing foreclosure or pre-foreclosure? What solutions are there out there to get out of this mess? The first thing you can do is call your lender immediately. There is no time to waste. What you must realize is that you are responsible for getting the ball rolling in this situation, not the bank. After all, it is currently you who is living in the house. Any foreclosure workout, such as a formal repayment plan (forbearance) or loan modification plan will be initiated in the Loss Mitigation Department.

Refinancing your mortgage is another tactic. This will allow you to cash in on the equity in your home and wrap late payments, interest charges and fees into a new loan, putting you back in charge. It may take time to find financing. Contact a home loan professional to ask any questions regarding a refinance immediately.

Another idea is to sell your house. Cut your losses short. By selling it you can avoid having to do repairs and sprucing up. Get in contact with a real estate professional that specializes in distress sales and see what they can do for you.

Remember this: lenders DO NOT want your home. The foreclosure will cost any lender tens of thousands of dollars. Understandably they would rather avoid foreclosure as much as you. So if you are facing this possible situation, make it easier for yourself and for your lender by employing one or more of the above tactics, but ACT NOW!  



Dan Olson writes for KSTW-TV in Seattle. All opinions expressed in this column are his.