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— Says Shelden, "Don't sign with a person who knocks on your door the same day he knocks without doing a lot of checking. He might have to be registered with the Department of Real Estate. Explore what other loan products are out there." For example, there may be legitimate ways that you can get a loan you can handle -- say, with a longer maturity.

Most of all, "Go talk with your lender to see what the lender is willing to do," says Shelden.

Stan Sexton of New Horizons Realty in La Mesa notes that one alternative to foreclosure is the short sale. In such a case, the lender agrees to accept less than the amount due. There is also the deed in lieu of foreclosure, by which the borrower turns over the property to the lender without any foreclosure proceedings. Both sides must enter into the transaction voluntarily and in good faith.

Thus far, the foreclosure statistics, despite their sharp rise, are lower than economists expected. Therefore, some say the housing woes are coming to an end. But, says Saxton, "Deeds in lieu of foreclosure and short sales are big," and the optimism may be unwarranted.

Attorney Mark L. Miller is seeing some deeds in lieu of foreclosure and short sales but not as many as could be expected. The industry "is still in denial. Mortgage companies keep coming up with toxic loans" that will eventually increase foreclosures, he says. He is seeing people in trouble grabbing 50-year loans. "I'm the doctor. People want me to fix their mortgages. But bankruptcy is the answer," and bankruptcies are going up sharply.

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