Short answer: Make your payments in full and on time.

Foreclosurei is the legal means by which your mortgagei company can take possession of your house when you fail to meet the obligations you agreed to in when you signed the mortgage. And, if losing your house wasn't bad enough, the mortgage company could seek a judgmenti (called a deficiency judgmenti) against you what would require you to pay the difference between what was owed on the house and what they were able to sell it for. In addition to that, you crediti is usually ruined for a quite some time making it more difficult to qualify for credit in the future.

So, how do you avoid all this? First step is to keep the lines of communication open with the mortgage company. Don't just try to 'hide' from them by dodging phone calls and not opening letters. If you are in a tough situation, talk to the lender. Let them know what is happening and ask them for some help. They will ask for information such as your monthly income and expenses and should try to work with you. The truth is, the lender doesn't want your house. Foreclosures don't look good to their shareholders so they will usually try to work with you to resolve the situation.

Some of the options the lender may offeri are:

• Your mortgage company may offer to arrange a repayment plani to help you through your current financial situation. This could include temporary payment reductions or even a suspension of payments. These options are usually offered to people who were reliable in making their payments but are suddenly unable to do so do to something outside of their control such as job lose.
• Depending on how much of your payment you can afford you may be asked to refinancei the loan so that you can lower the monthly paymenti. This is usually for people who have had a decrease in income such as someone who lost their job and had to take a lower paying job in order to make ends meet.
• Your mortgage company could help you get an interesti-free loan from HUDi for the purpose of bringing your loan current. To qualify you must be at least four (but not more than twelve) months delinquent, the foreclosure process can't have started, and you are once again able to make your monthly mortgage payments in full.
• You could also do a pre-foreclosure sale. This is simply selling your property to someone before the bank has a chance to foreclose on the property. This keeps your credit from being ruined and could give you some funds for starting over. In cases like this you are usually dealing with real estatei investors. The investors generally look for properties that are for sell for 70% to 80% of the value of the property. This means that you will usually need 20% to 30% equityi in your home. Once your lender takes the first steps to foreclose on your property you will start getting calls and letters from investors who are interested in your home. Many are legitimate businessmen, but some are scam artists so be cautious. Also, realize that you need to sell fast so don't expect to get top dollar for your home.
• The last option is to do a Deedi-in-lieui of foreclosure. This is a process where, instead of forcing your mortgage company to go through the long drawn out legal process of foreclosing on your property you voluntarily give them the deed to the property. This option leaves you without a house, but it allows you to get out from under the debti. However, not all mortgage companies will accept this and those who do will not accept it for all properties.

In closingi, beware of scams! If it sounds too good to be true, it probably is. If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty. Be especially
alert to the following:

• Equity skimming. In this type of scam, a "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the mortgage company to foreclose. Remember that signing over your deed to someone else does not necessarily relieve you
  of your obligation on your loan.
• Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself,
  for free, such as negotiating a new payment plan with your mortgage company, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services call HUD-approved housing counseling agency. Do this before you pay anyone or sign anything.

Here are several precautions that should help you avoid being "taken" by scam artist:

• Don't sign any papers you don't fully understand.
• Make sure you get all "promises" in writing.
• Beware of any loan assumptioni where you are not formally released from liability for your mortgage debt and contracts of sale.
• Check with a lawyer or your mortgage company before entering into any deal involving your home.
• If you're selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Real Estate Commissioni, or the local District Attorney's Consumer Fraud Unit for this type of information.