Typically, in their initial letters and telephone calls, your lender will state that they have not received your payment(s) and inquire innocently whether or not you have mailed a payment. What you say in response to your lender's inquiry is another matter. If you already mailed your payment, give your lender the date. If you have not, tell the truth. Your lender in turn will want to know why you haven't paid, and what date you will be sending a payment. Acknowledge that you are having temporary financial problems and that you won't be able to make the payments for the next couple of months. Provide a good explanation of your financial difficulties (i.e. layoff, medical emergency, death in the family, loss of business, divorce). Contrary to popular belief, sharing this information will not speed up the foreclosure process. What you say may make the lender more sympathetic to your situation and may delay the foreclosure. At the very least, it will foster a positive atmosphere for negotiations later in the process. Your lender may warn you that if payments are not made, your loan will go into default. It may also threaten to start foreclosure proceedings unless you bring all of your payments current immediately. Don't be intimidated. Stay calm and understand that the person you're dealing with is simply doing his job. At this point, write a letter explaining your financial problem and request an appointment with a senior loan officer to discuss your loan.

[continued in Part 2 of this article]

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