Home loan foreclosures hit a 30-year high last month. The biggest culprits? Rising unemployment, sinking stock portfolios and unexpected expenses like illness and death.

If you’re finding yourself short of cash and are worried about missing a mortgage payment, the time to act is now. Here are some things you can do to keep your home and credit history safe.

If you’re juggling the bills to get them paid, make sure you pay your mortgage first. And pay it on time. Once you start paying late, you begin to wreck your credit history and could rack up late fees and penalties, which will make it tougher to get back on top of your payments.

If you do miss a payment, your lender will probably send you a letter. Don’t ignore this letter. It’s not going away. In fact, you should contact your letter immediately and ask for the loss mitigation department.

You’ll want to explain your situation and why you’re late with your payment. The lender will want to know when you plan to make your payment and will probably want to see some of your financial information, so start getting that stuff together.

Even if you’ve missed a payment, there are several ways for you to avoid foreclosure.

First, there’s something called special forbearance. This means your lender may be able to arrange a repayment plan including a temporary reduction or suspension of your payments. Lenders can also modify the terms of your mortgage, by extending the payments or terms. The lender may be able to help you get an interest-free loan from the Department of Housing and Urban Development for part of what you owe. You can also stave off foreclosure by selling your home or as a last resort, you can give your house to the lender as long as the lender agrees not to foreclose.

To figure out whether you qualify for any of these options, spend some time with a HUD-approved housing counselor agency.

You can find a HUD-approved housing counselor online at www.hud.gov or call toll-free at 1 (888) 466-3487.

Published: Oct 8, 2002