For homeowners, sometimes too much can mean not enough. "Too much" of a mortgage payment can result in "not enough" cash to make the monthly payment, with the worst-case result being a foreclosure on the house. This is occurring with greater frequency to borrowers who took out huge, adjustable rate mortgages, and then couldn't make the payments when their rates spiked.

Foreclosure can happen, but this step is as unattractive to the lender as it is to the borrower. That's because a foreclosure can cost a lending institution hefty price tags from $40,000 to $50,000, prompting many of these companies to provide other alternatives.

Alternate programs cure what ails you

To avoid foreclosures, many lenders offer different payment programs that will allow borrowers to work through their problems. While lenders aren't required to provide alternative payment plans, those that do generally offer the following types of options:

1. Repayment plans: Monthly payments are spread out, and late fees are added onto the loan.

2. Forbearance: Mortgage payments are reduced or even stopped for an agreed-upon time period.

3. Selling the home: The borrower is allowed to sell the home for less than the mortgage balance.

There are third-party companies who can serve as intermediaries and help set up these types of repayment programs, much like conventional credit card counseling services. Check with the Department of Housing and Urban Development to make sure that these companies have been certified.

Refinancing to the Rescue

Some lenders may also allow a borrower to refinance a loan. Banks may simply rewrite the loan in these cases, either moving a borrower to a longer repayment term, or switching to another adjustable rate mortgage. Generally, these include higher interest rates on the loan, a natural consequence for a borrower who has over-extended his or her finances.

If you find yourself in mortgage payment misery, there are steps you can take to avoid a foreclosure. Remember, such a drastic financial action hurts both you and your lender.