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People facing house foreclosure are often confused as to what options are available to either save their home or minimize the impact to their credit. As a private real estate investor, I know that most homeowners want to stop foreclosure proceedings by working out a payment plan, but some can no longer afford their loan payments and are left with few options.

Contact the Lender

Individuals concerned about house foreclosure must become highly proactive in taking steps to remedy the situation. The first line of defense is to contact the servicing lender. When borrowers default on home loans their account is turned over to bank loss mitigation.

This division handles a multitude of delinquency problems and it can be challenging to speak with a representative. If unable to make phone contact, the next step would be to call the bank and request a meeting with the branch manager.

If this doesn’t provide results, the final step would involve sending a certified letter with a return receipt request. This provides borrowers with a signed document showing the name of the person who received the certified letter.

Reach out to a Bank Loss Mitigator

The role of bank loss mitigators is to help borrowers devise a plan that will allow them to avoid foreclosure. While it often appears as if banks are only interested in repossessing properties, the truth is the foreclosure process costs a considerable sum of money. When possible, banks would rather work out a plan than commence with foreclosure.

Loss mitigators can offer a variety of solutions including loan deferment, mortgage forbearance, loan modification, and mortgage refinance. Much depends on borrowers’ payment history; number of delinquent payments; loan balance; and borrowers’ current financial situation.

When loan deferment is offered, borrowers are given permission to skip a predetermined number of loan payments, usually for 1 to 3 months. Once the deferment period expires, borrowers remit the full amount of skipped payments. This can be a good option for borrowers facing temporary financial setbacks, but they must be in position to repay missed payments at the end of the deferment period or the bank can commence with foreclosure action.

Mortgage Forbearance

Mortgage forbearance plans allow borrowers to skip payments or pay partial loan installments for a specific amount of time. Similar to loan deferment, forbearance agreements prevent the bank from commencing with foreclosure as long as borrowers remain in compliance. When forbearance plans expire, borrowers enter into a payment plan to pay skipped amounts.

Careful consideration should be given when entering into either of these options because banks can immediately engage in foreclosure if borrowers are unable to pay skipped amounts or remain current with future payments.

Loan Modification

Loan modification alters terms of the mortgage note. Banks can reduce the rate of interest, lower principal amounts, or both. Most lenders reduce interest rates which in turn reduces loan installments. However, a few banks are now reducing principal amounts when borrowers owe substantially more than the property is worth. Lowering the principal balance often allows borrowers to save their home from foreclosure and meet future loan obligations.

Making Home Affordable

Prior to contacting the serving lender, borrowers may first want to investigate the Making Home Affordable program. Many banks are participating in this program which engages in loan mods, mortgage refinancing, and foreclosure alternatives. Participating lenders are required to respond to foreclosure assistance requests within 30 days.

If borrowers cannot afford to prevent house foreclosure they may be eligible for Making Home Affordable ‘Exit Gracefully’ program. Options include real estate short sales or deed in lieu of foreclosure. Qualified homeowners can receive up to $3000 in relocation assistance funds.

Short Sale

Real estate short sales involve selling the property for less than owed on the loan. Deed in lieu of foreclosure involves returning the property to the lender. Careful consideration should be given to both options as banks oftentimes hold borrowers responsible for deficiency amounts between the loan balance and property sale price.

Borrowers may find it advantageous to obtain counseling to determine which options are best suited for their needs. The Department of Housing and Urban Development has received over $70 million in grant money to provide free housing counseling to those in need. Program details and a list of nationwide housing counselors are available at

As millions of high school graduates embark onward to college within the next few months many families will find themselves having to plod through student loan applications. In a weak job market student loans become increasingly hazardous and student loan debt is harrowing. For example, according to several sources, on May 8th 2012 the total amount of debt from student loans reached the 1 trillion dollar mark (as measured by the student loan debt clock created by Mark Kantrowitz). Clearly I wanted to avoid the financial horrors of student loans. One of my best personal financial moves was to avoid taking out student loans to afford a four year college and instead attend a community college.

There is a stigma attached to attending a community college, for instance in my hometown many referred to community college as “13th grade.” By some standards this statement holds true in the form of lesser quality education materials or insufficiently trained faculty and staff in comparison to a four year college. Although from my personal experience I discovered that, for the most part, the first year of college (be it in community college or a four year college) is relatively similar in that, basic level courses are generally taken. Unless college credits were earned in high school to avoid having to take English 101, History 101, etc. Generally freshman college students will find themselves having to stave off drowsiness and sit through these basic general requirement courses again while having to pay for them this time around.

Although this isn’t always true, but in some cases attending a two year college may make it easier to hold a part time job. For example, in my situation I held a job at a local business practically down the road from my community college. The other major plus of attending a community college was that it cut my tuition in half, with minimal financial aid I completed two years of community college having spent around $8,000 a year so my associates degree was roughly worth $16,000. Had I attended a four year school my tuition may have been $18,000-$23,000 per year (even more had I chosen to dorm). So rather than attending a four year college and spending $36,000-$46,000 in my first two years I cut that in less than half by spending $16,000 for two years of community college.

Of course there are benefits to attending a four year college right out of high school. Several of my friends did so and they are happy with this decision. When it comes right down to it, depending on the financial factors in your family and your own life, community college may not be as worthwhile as a four year college. Of course there will also be those cases of students who must take a student loan out for community college as well, but at least it won’t be as expensive as a four year student loan.

For me personally, attending a community college and avoiding student loans was a cheaper option in comparison to attending a four year college and I still consider it to be my best financial move.

Early on in your career, you may realize that the pay you are making at your job is not enough to cover the costs of your living expenses or not enough to pay off debt you may have incurred from overzealous charging or loans. Not only are people at the beginning of their careers debating a second job, but more people in general want a second paycheck in hopes of being able to afford the lifestyles they want.

Before you do make the decision to take on a second commitment, there are several factors you should evaluate and weigh before signing on to something.

The first thing you will need to decide is whether you actually need a second job. If you know that you can limit the amount of expenditures you currently have to either save more money or make larger payments on debt, the need to get a second job may not be as great as you think. Some people take on second jobs for more material reasons such as being able to afford a lifestyle their current job may not support.

The choice is up to you, but once you actually decide there is a need to get a second job, think about the following:

First, do you have the time? If you are already working a 40-hour work week, your extra time to commit to a second employer is limited to mainly weekends or nights. In addition to this, you need to evaluate how much time you want to leave for yourself. If you decide to fill up every hour you are not working at your primary job, with hours spent at your second job, you will soon be left wanting time off for yourself. You need to factor in other commitments such as friends or family time that counts just as much as the time you spend at a job.

If you do not do this, you will end up getting burned out and will eventually have to quit your second job. So, you may as well save yourself from the potential stress, by creating some sort of chart or simply thinking about just how much time you can devote to a second job.

Another point you should consider is pay. Chances are, your second job will not pay that much since you will not be working as many hours at this job as your primary place of employment. As a result, you need to determine if the pay is even worth your taking on this second responsibility. If you are having to drive farther or more because of your second job and your second paycheck is just paying for mileage, it is not worth it.

In addition, you also have to factor in time spent. Not only are you driving around more, but time is being spent as well. These are opportunity costs you need to think about before making that plunge.

You should also think about how this second job will affect your current employer. If you are working for another company in the same industry that your employer may consider competition, you may have a problem on your hands. Many employees have to sign non-compete contracts and if you break those terms, you may find yourself in some major trouble.

While all of these points may sound negative, they are just meant to make you think about all aspects in terms of getting another job. The main components you will need in order to succeed is organization and focus. If you want a second employer, you need to keep your eyes on the prize (whatever it is that you need the extra money for) otherwise you will get either burned out or lose motivation. It is definitely doable, you just have to put in a lot of thought into it before actually doing it.