The Common Law

Yes. Open and respond to mail or other notices from your lender if you are having difficulty making the mortgage payments. Don't ignore the late payment and any problems you may have making regular mortgage payments in the future. The further behind in payments you become, the more difficult it will be to reinstate the loan and the more likely it will be that the lender will initiate formal foreclosure proceedings. As last week's "Common Law" discussed, foreclosure is a serious problem – it can cause you to lose your home, owe the lender additional money (if there is a deficiency judgment), and will damage your credit score.

Rather than ignore the problem, it is generally better to contact the lender as soon as you realize you may have a problem making payments. Lenders will sometimes offer options to homeowners to help them through difficult financial periods. Lenders are in the business of lending and collecting money, not owning homes, which is why lenders generally prefer to continue to receive mortgage payments rather than initiate foreclosure proceedings.

There are numerous resources that can help you learn more about foreclosure prevention options. For example, the U.S. Department of Housing and Urban Development provides free or low-cost housing counseling. HUD housing counselors can help you organize your finances, assist in negotiations with your lender, understand foreclosure law and your options. Call 800/569-4287 to find a HUD-approved housing counselor or check out HUD's website on foreclosure issues (www.hud.gov/foreclosure/index.cfm).

Read next week's "Common Law" to learn why you should beware of "foreclosure rescuers" or "foreclosure prevention companies."