1. What are some of the things I can do to help bring my mortgage current?
2. I receive letters from people claiming they can help save my home. Is this a scam?
3. Is bankruptcy an alternative to foreclosure?
4. If a foreclosure proceeding is initiated, what happens to the equity in my home?
5. How does foreclosure affect my credit?
6. How does foreclosure affect my ability to acquire a home in the future?

1. What are some of the things I can do to help bring my mortgage current?
Your first step is to contact your lender or servicer. Also, consider other resources to help you repay your mortgage. Can you reduce your expenses? Can you earn additional income with a second job? Or borrow money from a family member or other sources that can be applied to your mortgage loan?

Also, if your financial difficulty stems from a military wage earner who has been deployed to active duty, the Servicemembers' Civil Relief Act of 2003 (SCRA) provides important rights. SCRA covers a variety of issues including mortgage interest rates and foreclosure.

Learn more about SCRA.

You may also consider consulting with a nonprofit homeownership counseling organization or a reputable credit-counseling agency to help you organize your finances and establish a workable repayment plan. Leave no stone unturned in trying to get the money to pay your loan.

2. I receive letters from people claiming they can help save my home. Is this a scam?
Once a foreclosure proceeding is initiated, certain documents are a matter of public record and anyone can review the information that is filed with the court. Investors, bankruptcy attorneys, for-profit foreclosure prevention specialists and real estate professionals, who may not be acting in your best interests, all have access to it. You may receive communications from them regarding your personal situation. Before you retain the services they offer, speak to your lender or servicer.

3. Is bankruptcy an alternative to foreclosure?
Bankruptcy is a matter of personal choice and is something that should be discussed with an approved consumer credit counselor or bankruptcy attorney. If you file for Chapter 7 bankruptcy, you may lose your home and eliminate any remaining deficiency on the loan. If you file Chapter 13, you may be able to resolve the default over an extended period of time (30-60 months) while maintaining your current monthly payment. Keep in mind that this does not change other terms of the mortgage. If you were unable to afford the regular monthly payment, you may continue to experience difficulty in making a monthly payment to include an amount to recover the delinquent amount.

4. If a foreclosure proceeding is initiated, what happens to the equity in my home?
Although each state has its own laws pertaining to foreclosure and equity, in most cases, any accumulated equity in the home is lost in the foreclosure.

5. How does foreclosure affect my credit?
Both foreclosures and deed-in-lieu (where the lender accepts the deed to the property to avoid having to foreclose) are damaging to your credit and will be reflected on your credit report for seven years. If your credit report shows a foreclosure or deed-in-lieu, you may have trouble obtaining new credit for at least a few years. You may, however, include a written statement on your credit report that explains any hardships that led to the foreclosure.

6. How does foreclosure affect my ability to acquire a home in the future?
Even though buying a home after a recent foreclosure is possible, most lenders will not approve a mortgage loan immediately following a bankruptcy or foreclosure. If you want to buy a home in the future, focus on rebuilding your credit by paying all your bills on time. After you've established a history of on-time payments, you should be in a better position to shop for a mortgage loan.