Depending on your type of mortgage and your lender, you may have other options. Most lenders, wary of rising foreclosure rates, would rather work out some sort of solution than take your home. Lenders are in the business of lending money, not selling houses, and the process of foreclosure is a tedious one that most institutions would rather avoid. The first thing you should do if you find yourself with a problem making your payments is to call your lender and discuss the matter with them. The sooner you contact them, the more likely you are to work out a solution that’s agreeable to both of you.

Here are a few possible tips to avoid foreclosure for buyers who are having temporary cash flow problems:

• Your lender may agree to temporarily suspend payments until you are able to resume paying them. Alternatively, your lender may be willing to restructure or refinance your loan.
• If your loan is insured by the department Housing and Urban Development or the FHA, you may be eligible for a one-time payment to bring your mortgage payments up to date. For details, contact the HUD or FHA directly.
• You may be able to sell your home to pay off your loan. This is clearly not the first choice for many homeowners, but it is a better option than losing your home outright. Rising real estate prices during the last few years have left many homeowners with a lot of equity. You may be able to sell your home for more than you owe, which will relieve your debt and leave you with some cash left over.
• Your lender may be willing to simply take the home back, rather than force you out of it. You lose the house, but your credit rating will not likely suffer.

These are just a few choices that may be available to you. Your lender may offer other solutions, as well, so don’t hesitate to call them if you find yourself in financial trouble. It is far better to contact the lender and tell them of your problems than to have them call you and ask, Where is our money? Be forthright and tell them that you want to work something out, and you may find a solution that allows you to keep your home. It never hurts to ask, especially if you other option is foreclosure or bankruptcy.

Foreclosure fraud is a serious problem and the criminals at large use a bevy of methods to dupe unknowing homeowners. Imposter companies will make promises of mortgage help, requiring customers to pay money up front for the services, then split town, never to be heard from again. Criminal organizations may also go straight for the house itself, asking borrowers to hand over ownership while the fraudsters assure the customer it will be theirs again a few years down the road. The latter part of the deal, however, does not occur. No matter the illegal method of conning homeowners out of their home, the outcome is generally just that – the loss of a home.

As a homeowner facing foreclosure, the Federal Trade Commission offers the following red flags people should be wary of when working with unknown companies:

If you’re looking for foreclosure prevention help, avoid any business that:

• Guarantees to stop the foreclosure process – no matter what your circumstances
• instructs you not to contact your lender, lawyer, or credit or housing counselor
• collects a fee before providing you with any services
• accepts payment only by cashier’s check or wire transfer
• encourages you to lease your home so you can buy it back over time
• tells you to make your mortgage payments directly to it, rather than your lender
• tells you to transfer your property deed or title to it
• offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
• offers to fill out paperwork for you
• pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

(http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm).

Foreclosure is an overwhelming situation to face. The good news is there are a number of credible organizations that provide loan modification or other services that can help you keep your home. As with any financial undertaking it’s imperative to take the time to do some background work and become knowledgeable about the organization and its services should you choose to use them.

The Fair Debt Collection Practices Act

Regardless of how or why an account goes into collection, one must work directly with the agency to then manage their accounts. During this process consumers are afforded certain government rights under The Fair Debt Collection Practices Act (FDCPA).

What is the FDPCA?
The FDCPA is designed to protect consumers from unfair, unethical, abusive and illegal bill collection practices, as well as provide guidelines for collection agencies seeking to collect legitimate debts (in addition, some states have similar laws that may cover a broader range of debt collection conduct).

The collection process is a controlled one. Attempts to collect a debt can be done in person, via mail, phone (only between 8 a.m. and 9 p.m., unless you agree that calls at other times are acceptable), fax or telegram. After the initial contact, the agency must then send you written notice advising you of the creditor, amount owed and action to take if believe you do not owe the money. By request, they must also provide you with proof of the debt, i.e. copy of the bill, etc.

The FDCPA also encompasses a wide range of prohibited actions by collection agencies.
For example, threatening you with arrest or imprisonment for non-payment of debts, misrepresenting the amount of debt, attempting to collect interest charges or fees not permitted in your initial sales agreement and using insults, obscenities or racial slurs are all prohibited.

Other restrictions include harassment in the form of repeated calls at work (if you previously asked them not to), or if they know your employer does not allow collection calls. Likewise, they may not inform your employer why they are calling, unless the employer was asked beforehand.

Additional FDCPA restrictions include:

• Giving any impression that the person contacting you is an attorney, works for a credit bureau or is a government representative.
• Threatening to sue to garnish wages or seize personal property, without intention or legal right to do so.
• Discussing your debts and other personal information without your consent. This does not include contacting an account co-signer or other person to obtain your contact information (phone numbers, address, place of business).
• Prematurely depositing post-dated checks from you.
• Continuing to contact you if you are represented by legal counsel.

Your Legal Solutions:

If you believe your rights have been violated by a collector, there are several relief options available.

One is to contact the Federal Trade Commission (877-FTC-HELP) for information or to file a complaint. Another option is to sue in state or federal court within one year from the date any law/s was violated.

The easiest way to avoid the above scenarios is to take care of any outstanding debts before subjected to collection. However, if the latter happens, there are structures in place to uphold your rights as a consumer.