Every year, millions of Americans face the risk of foreclosure. The simple truth is that bad things can happen to good people, and financial hardship is tough to overcome. 70 percent of foreclosures are caused by job loss, disability, divorce or the death of a wage earner. But there are many other reasons as well, such as getting overextended on credit, a drop in home value or just not understanding the rates and terms of the mortgage.

Homeowners who can no longer make their mortgage payments on time often believe that foreclosure is inevitable. In fact, the question we most often hear at CitiMortgage is, "When do I have to move out?" A better question is, "What are my options?" Because you have several, even if you've already received a foreclosure warning letter from the mortgage lender's attorney.

"The fact is that no one wants foreclosure, including your lender," according to Nate Blackstun, Vice President of Mortgage Default at CitiMortgage. "It's in everyone's best interests to work it out... to save your home from foreclosure."

When a borrower gets 90 to 120 days behind on mortgage payments, the lender's attorney generally mails the foreclosure warning letter to the borrower. But even then, it's not too late to pick up the phone and call your lender. The foreclosure timetable for every state is different, but there's still time to work it out.

If you're a CitiMortgage customer, call the CitiMortgage Homeowner Assistance Team at 1-800-888-6001. The hours are Monday through Friday, 7 am - 11 pm; Saturday and Sunday from 7 am to 7 pm. All times are Central time zone. For answers to many common questions, you can also visit the CitiMortgage Homeowner Assistance website.

"When you receive a letter from the lender's attorney, it doesn't mean you're going to lose your home tomorrow," Blackstun said. Instead, your lender wants you to call right away and discuss your options. Don't wait until two or three days before the scheduled date of the home sale. The earlier you call, the more options you'll have. "And be candid with your lender, to determine what you can and can't afford."    

7 Ways to Avoid Foreclosure

Here is an overview of the major programs offered by the federal government and mortgage lenders. Typically, your lender will see if you qualify for government assistance first. If you don't, lenders generally offer a variety of options themselves. For details and to see which option makes the most sense for you, contact your lender immediately.

Federal government program:

§       Home Affordable Modification Program (HAMP): If you plan to keep your home, this federal government program can help lower your monthly mortgage payments by either modifying your loan terms or refinancing it altogether. If you aren't going to stay in your home, HAMP can help you avoid foreclosure by lowering your loan's principal balance, so you can sell the home for less (called a 'short sale'). Or, you can transfer the legal title of your home to the lender, in exchange for forgiveness of the debt (called 'deed-in-lieu of foreclosure').  CitiMortgage has consistently ranked very high among the large mortgage servicers in using this program to help keep more people in their homes. You can hear more about it by watching this short video: "Citi's Response to the Mortgage Crisis" and visiting the CitiMortgage Homeowner Assistance Team website.

        The Federal government provides free resources to get you the help you need. Call the Homeowner's HOPE™ Hotline at 1-888-995-HOPE (4673) for information about the Making Home Affordable Program and to speak with a HUD-approved housing counselor. Beware of anyone or any organization that asks you to pay a fee in exchange for a modification of a delinquent loan, asks you to sign or transfer your deed to your home, or tells you to make your mortgage payments to anyone other than your mortgage company.  Scammers often make promises, such as guaranteeing to save your home from foreclosure or lowering your mortgage payment, and may also indicate that they have direct contact with your mortgage company when they really don't.  Foreclosure rescue and mortgage modification scams are a growing problem and you must vigilant in protecting yourself. 

Mortgage lender programs:

§         Deferment Plans: Some or all of your past-due payments are 'deferred' to the end of your loan term. So you can get back on a regular schedule of monthly payments, without feeling the pressure of late payments that have piled up.

§         Repayment Plans: A portion of your past-due amount is added to each regularly scheduled payment. So unlike a deferment, you start catching up on your late payments right away.

§         Modification Plans: Your lender reworks your original loan agreement to make the monthly payments more affordable. Sometimes, this means lowering the interest rate.  If you meet the eligibility criteria for a loan modification, you will be offered a Trial Period Plan.  During the trial period you will be required to make a trial period payment based on your current income.  If your loan modification is approved, all past due amounts, including unpaid interest, real estate taxes, insurance premiums, and certain assessments paid on your behalf to a third party are added to your mortgage loan balance.  If the modification is not approved, you are still responsible for all past due payments.

§         Partial Claim: This is an additional, one-time loan to help you make past-due payments.   

§         Short Sale: In a short sale, your lender allows you to list and sell your home with the understanding that the net proceeds from the sale could be less than what is owed on the mortgage loan.  This option allows you to lower the listing price and potentially sell the home faster.  If the Short Sale is approved, the amount of the loan not paid with the net proceeds from the sale may be considered income and could result in tax consequences.  

§         Deed-in-Lieu of Foreclosure: A Deed-in-Lieu allows you to voluntarily transfer ownership of the property to your lender, and the debt is forgiven.  The amount of debt forgiven may be considered income and could result in tax consequences. 

Far too many homeowners believe that, if you're even a single payment late, the lender is going to take your home away from you. That simply isn't true; but if the late payments begin to pile up and you do nothing, you may be giving your lender no choice.

If you receive a foreclosure letter from your lender's attorney, it's still not too late to work it out. But don't wait any longer: Call your lender immediately to discuss your options. If you're a CitiMortgage customer, call 1-800-888-6001.