Banks are reaching out to help homeowners avoid foreclosure.

Are you in danger of getting behind on your mortgage payments? Maybe you are not behind, but you are heading into hard financial times and can see the writing on the wall. With the failure of so many large corporations, untold numbers of jobs have been lost. Many business failures and job losses are in the news daily and even the businesses that have kept their doors open are struggling. Lay-offs are skyrocketing. Many other American families are facing medical bills, disabilities, and illnesses. Small business owners are closing up shop in droves. Times are tough. Home owners are stressed. Currently there are more than 4 million borrowers who are in foreclosure, behind on their mortgages, or may soon become behind.

In an unprecedented move, Citigroup is one institution reaching out to borrowers in efforts to help them stay in their homes and avoid foreclosure. Those living in areas where housing is declining in value and where job loss is on the rise may qualify for reduced terms. This program is intended for home owners who are not yet behind on their mortgage.

Why is Citigroup doing this? Is it an altruistic gesture? The simple answer is this…It costs banks more to foreclose on a home than it does to work with a homeowner and help them stay in the home. The term Reduced terms that is referred to is pretty much the same thing as a loan modification or a loan rework.

For those who have missed mortgage payments, Fannie Mae and Freddie Mac will be offering reduced terms to borrowers who meet the following criteria:

• You must be living in your house.

• You cannot have filed for bankruptcy.

• You must be at least 3 months behind on your mortgage.

• You must owe at least 90% of your homes value.

For homeowners who qualify, the mortgages will be restructured so that the payment will not be more than 38% of the household’s monthly income.

For homeowners who are not associated with Citigroup or Fannie/Freddie, hear are some tips on how to communicate with the lender:

• Talk to your lender BEFORE you get behind.

• Assure the lender that you want to work out a situation that will allow you to stay in your home.

• Ask the lender where to send a hardship letter explaining why you are (or will be) having difficulty making your mortgage payments.