Financial literacy is the means of empowering consumers to make informed financial decisions through exposure to accurate and timely information. In no other area is the void of accurate information more evident that in the area of foreclosure.

The national foreclosure rate is at the highest level since the Great Depression. Families fall behind on the mortgage payments because of illness, job layoffs, business failure, divorce and marital problems, and bad money management decisions. Foreclosure and the loss of the home is the usual result. Foreclosure is financially and psychologically devastating to the stability of the household.

This article provides information to expose homeowners to the financial principles of loss mitigation. Loss mitigation is essential to asset protection because it provides the borrower with information necessary to make good decisions. Learning the programs or "tools" available as an alternative to foreclosure is the key to preserving home ownership.

For example, If I told you that the mortgage servicing industry reports average loss of $20,000 to $30,000 per foreclosure, then you may be inclined to believe that foreclosure is not an efficient and cost effective means of collections for the lender. According to Vic Draper, President of Universal Default Services, "33% of all mortgage defaults that go to REO never made contact with the borrower!" The lender does not want your home and will work out a financial alternative if you speak their language.

LOSS MITIGATION TOOLS

A homeowner should know and understand options available during times of crisis. It makes the difference in gaining ground in challenging situations. A point well presented by Gerry Spence, legendary attorney and best selling author of