Fight back against a foreclosure

NEW YORK (CNNMoney.com) -- It is a scary time for homeowners who may see their monthly mortgage payments double or even triple as their interest rates reset. But there are some steps you can take if you think you're in danger of foreclosing.

If you think you're going to be late making a mortgage payment, the first thing you should is to pick up the phone and call your lender. Banks will be more forgiving today when it comes to negotiating payments, according to Todd Beitler of the Real Estate Library.

There are millions of homes that are expected to be entering foreclosure. And banks really don't want your home. You should be able to negotiate a payment schedule or change the terms of your mortgage so that your monthly bills aren't as high.

Don't wait until you miss two or three payments until you call your lender. You'll be in default of your loan and you'll be less likely to save your home.

When you do call your lender, make sure you ask for the loss mitigation department. These are the folks who will try to work out a payment plan.

Make sure that you get through directly to this department. Don't let customer service representatives say they'll forward your request. Persistence is key.

When you do negotiate, you can ask for forbearance. This is a plea to suspend your payments for a small amount of time, or to temporarily reduce your payments for a while.

You can also ask to modify your mortgage. This allows you to change the terms of your mortgage, so you may be able to make lower monthly payments.

To increase your negotiating power with your lender, bring any document that proves you've been proactive. This includes documented e-mails, faxes and phone conversations. You may even want to bring in a recent pay stub, or if you are starting a new job a letter of intent for employment from your future boss. The more you can prove how diligent you are with this process, the better it will reflect on you.

Having a foreclosure on your credit record can in short, destroy your ability to get credit in the future. A foreclosure can stay on your record for about 7 years. Your credit score could potentially drop hundreds of points, says Todd Mark of Consumer Credit Counseling Services. Even if you have a high FICO score, missing a single payment can cause your score to drop 100 points, says Craig Watts of Fair Isaac.

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