If you're having trouble making your house payments, the first thing to know is that you are not alone. Home mortgage defaults are at an all-time high across America. This is good news for you, because it means that mortgage lenders are familiar with people in default on their home loans and often have established programs and policies to deal with such situations.

Let's begin with a definition

"Foreclosure" is the right of a mortgage lender to sell your house at a public auction and keep the proceeds if you fall behind on your mortgage and don't take steps to get back on track or work out another solution. There are two different kinds of foreclosure. One is called a "judicial foreclosure" because the lender must file papers in court and obtain the court's approval before foreclosing. This kind of foreclosure can take as long as 18 to 36 months before you would ever lose your house. Most states have judicial foreclosures. If you signed only a traditional mortgage note when you purchased or refinanced your property, your lender probably must use a judicial foreclosure to sell your house.

The other kind of foreclosure is called a "nonjudicial foreclosure" because the lender does not have to go to court in order to foreclose. Instead, a third-party trustee sells your property after sending you a series of notices. The trustee is the person or business named in a deed of trust which you signed instead of, or in addition to, a traditional mortgage when you purchased or refinanced your property. Non-judicial foreclosures can happen quickly, sometimes in as few as four months.

It's very important that you know if you signed only a traditional mortgage or a deed of trust. Your options for dealing with your house may depend on how much time you have.

You also need to determine your ultimate goal. Is it to save your house at all costs? Let it go for the minimum possible damage to your credit? The options you want to pursue will depend on your desired outcome.

So what are those options?

Find Money to Get or Stay Current

As odd as it sounds, some people never consider borrowing money from friends or relatives to get current on their home loan. This is probably not an option for someone substantially behind on payments, someone unemployed or otherwise unable to catch up or someone who wants to unload the property. But if you need help for a month or two, consider asking those who love you most and would want to help you out.

In addition, if someone co-signed your loan for you when you bought or refinanced, go to that person at once. First, you have an ethical duty to let the person know you are at risk of defaulting or that you already have. Secondly, your co-signer will want to avoid damaging his or her credit file and may lend you the money to get and stay current, share in the monthly payments or take over payments until you work out another solution.

Contact Your Lender

Maybe this is obvious. But if you want to keep your house and you are having trouble paying your mortgage - even if your lender has started the foreclosure process - contact the lender and try to work out a deal.

Before taking back your house, your lender would probably rather rewrite your loan, suspend principal payments for a while (have you pay interest only), reduce your payments, let you miss a few payments and spread them out over time or give you an interest-free loan to get current. Why would a lender do any of these things? Mortgage lenders are in the business of making money. They don't make money by trying to resell distressed real estate. ("Distressed" is a term used to describe a piece of property that's been foreclosed.) They do make money when you make payments, particularly interest payments, on an outstanding loan.

If your loan is held by the federal government - Fannie Mae or Freddie Mac - you may have some extra good news. In 1997, both programs made radical changes to their home loan default programs, emphasizing foreclosure prevention whenever possible. Both Fannie Mae and Freddie Mac offer rate reductions, term extensions and other loan modifications for people experiencing involuntary money problems. One option would allow you to make reduced payments for up to 18 months. If you can't get help from your loan servicer, you can call either loan holder directly at 202-752-7000 (Fannie Mae) or 800-373-3343 (Freddie Mac).

Keep in mind one thing: if you truly can't afford to keep your house, negotiating for a new loan or temporary suspension of payments may not help you in the long run. You may be wasting your time and money if you try desperately to hold on to a house you honestly can't afford.

Talk to a Foreclosure Counselor

It might make sense to get a free phone consultation with a professional foreclosure counselor to see what your options might be. A free phone foreclosure consultation does not mean you are obligating yourself to anything, just doing your homework so you know what options might be available to help you avoid foreclosure.

Find a Good Mortgage Broker

Again, this is an option to consider if you want to hold on to your house. If you have tried negotiating with the lender and can't come up with a deal that you can afford, don't give up. A licensed mortgage broker might know of more options. Good mortgage brokers have access to information about hundreds of loans offered by banks, savings and loans, finance companies and other mortgage lenders. You may find yourself able to refinance and bring your payments down dramatically, at least temporarily.

Consider the case of Tony, who several years ago had a fixed rate mortgage at 11 percent. After he lost his job, he struggled for months to make his house payments. Then he met with a mortgage broker who knew about an adjustable rate mortgage that started at three percent, rising one percent every six months. Tony jumped at the loan, brought his payments down significantly and was able to keep his house while he spent another full year looking for a new job. After the interest rate climbed back well-above the going rate for mortgages, Tony refinanced again and currently has a loan at 7.5 percent.