Abstract: Foreclosures are on the rise but lenders are under government and State Officials pressure to be less quick to foreclose.

The moment the US government under President Bush, members of Congress and no fewer than 37 top State Prosecutors pile pressure on lenders to communicate with struggling home owners rather than simply pull the plug and automatically foreclose on a property the owner of which has missed a number of payments you know that just because a home owner’s finances have taken a bad turn it does not mean that nothing can be salvaged.

Let’s look at the facts that usually govern a situation about to go to foreclosure: 1. The homeowner has missed a number of payments and is facing some financial difficulty. But he was able, prior to that to actually make payments and keep things together so there is a good chance that given some leeway he can do it again.

2. The lender is following an in-house process which flags up a property for foreclosure. There is a built-in safety margin in this process which varies from lender to lender but times are tough and lenders these days are afraid that if they wait any longer and house prices dip they will lose even more money as the homes they have foreclosed on fetch a lot less than they might fetch now.

3. For a lender to foreclose on a property and decide to take possession and sell it on marks a certain desperation. Lenders are not really geared up to sell houses. Foreclosed properties are always less than perfect and even a prime example in a really good location usually fetches up to 40% below its market value, many times far less.

You will ask, quite naturally, why are there foreclosures then? Well, because it is the only tool left to lenders after borrowers fail to make a number of payments that ensure that they get some of their money back and send a strong message to other home owners regarding making their payments on time.

The point here is that with lenders under pressure from official channels to be a little less quick to foreclose on properties, struggling homeowners now have the opportunity to fight to keep their property by talking to the lender and seeing if they can come to some arrangement.

The rules here are: be honest, be creative and be prompt. Do not wait until the eviction agents are at the door to ring your lender. Call or write. Explain the problem in detail and, above all, offer a solution. In the foreclosure stakes Officialdom, for once, is very much on your side so make sure you capitalise on it and keep the communication channels open. After all it is your home that is at stake.

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