Homeowners may be seeking avenues to pursue if they believe they will be unable to make their loan payment.  Following is an excerpt from a recent article in the Wall Street Journal with helpful tips and additional resources including advice from HUD and a new FHA program to help borrowers transfer out of high-cost loans: FHASecure Plan.

What People Can Do If Foreclosure Looms

As Mortgage Woes Mount, Squeezed Homeowners Have Options To Try to Avoid the Worst — From Counseling to the Courtroom By AMIR EFRATI September 6, 2007; Page D1 For Full Article: http://online.wsj.com/article/SB118903997029818836.html  As mortgage woes spread, what’s a nervous borrower to do? Mike Wilt, who lives in Uniontown, Ohio, is trying to figure that out. Mr. Wilt, a marketing director for a communications firm, is current on his $180,000 adjustable-rate mortgage — the home’s price when he paid for it. But he says he may soon start to fall behind, as he’s been notified that his interest rate jumped to 11.5% from 8.5% in September, which will cost him an extra $400 a month.When he tried to refinance back in March, Mr. Wilt was turned down for a loan with better terms because of his credit score; not even his boss’s friends from a local bank could help. “The rules that got me into the original mortgage had changed,” says the 31-year-old, referring to what he perceives as tougher lending standards. FIGHTING BACK  Tips for homeowners who are facing default:• Call your loan servicer. Ask for the “loss-mitigation” or “work-out” department and try to modify the loan terms.• Talk to a housing counselor. Many work free of charge and can negotiate with the servicer on your behalf.• Contact a lawyer. If you were misled or not fully informed by a broker about the terms of the loan, it might be rescindable. You may also be entitled to damages.            ——————-Call the servicer. If you fear you can’t make your payments, industry experts say, call the company that takes your loan payments, called the mortgage “servicer,” to try to improve your situation. That could mean asking for more time to pay back the loan, getting a lower rate or switching from an adjustable rate to a fixed one.Servicers are often allowed by the agreements governing loans to renegotiate terms, a process known as a “work-out” or “loss mitigation.” In recent months, with property values declining in many markets, some companies are showing more of a willingness to work out an arrangement with struggling borrowers, according to housing counselors. Larry Litton Jr., chief executive of Litton Loan Servicing, which services 370,000 mortgage loans nationwide, says the company did 1,400 modifications in August, up from 500 the previous August.Talk to a housing counselor. Counselors communicate with servicers on behalf of borrowers and can give advice on how to delay foreclosure. They are available in many cities, and their services often are free.           ———————-READER RESOURCES • Tips on how to avoid foreclosure: Dept. of Housing and Urban Development¹ | Freddie Mac²• State-specific foreclosure information³• Find lawyers who do mortgage-lending abuse cases⁴The Department of Housing and Urban Development’s Web site, www.hud.gov⁵, has a nationwide directory of counseling agencies.Beware of “foreclosure rescue” scams. Federal and state prosecutors are investigating companies that offer temporary refinancing schemes in which borrowers get to stay in the home but go deeper into debt because the payments to the “rescuer” are higher than their mortgage payments.Additional information from HUD.gov website:Avoid foreclosure prevention companies.
Many for-profit companies will contact you promising to negotiate a loan work out with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD approved housing counselor will provide for free if you contact them. You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead.Don’t lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a HUD approved housing counselor or trusted real estate professional.

From FHA, the New FHASecure Plan:Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.“FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates,” said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery. To qualify for FHASecure, eligible homeowners must meet the following five criteria:1.       A history of on-time mortgage payments before the borrower’s teaser rates expired and loans reset; 2.       Interest rates must have or will reset between June 2005 and December 2009; 3.       Three percent cash or equity in the home; 4.       A sustained history of employment; and 5.       Sufficient income to make the mortgage payment.  For more details:  http://www.fha.gov/press/2007-08-31release.cfm