While many homeowners are fully aware that they are liable to be contacted by their lender or a third party debt collector if they fall behind on their mortgage payments or are facing foreclosure, many are not aware what their rights are in regard to what constitutes fair debt collection practices.

While the Fair Debt Collection Practices Act does not allow certain practices to be conducted by a debt collection agency it does not erase or cancel any legitimate debt the borrower may owe. There are many reputable lenders who are more than willing to work with the borrower. The following excerpt from a previous article that I authored illustrates what a buyer can do to resolve their default.

The lender will always work with their client, if he or she takes the initiative to communicate any financial hardships that may have caused the default. Try to negotiate with the lender for a payment adjustment in order to make up for the missed payment or payments. It is imperative that you act quickly in order to prevent the sale of your home, because once the foreclosure process begins you only have 120 to 140 days before your house is sold.

Contact your lender to explain your situation and work out a way for you to keep your house. By acting quickly you have the most time and the best chance of being able to negotiate a solution before the trustee files the notice of default. If foreclosure has already begun you must contact the lender during the 90 day period before the notice of trustee sale is posted and filed.

One of the most common causes of failure to communicate is that many homeowners facing foreclosure avoid contacting their lenders because they are upset, embarrassed or angry. Often, the homeowner mistakenly believes the lender will not help them because they feel that the lender prefers to foreclose on the property. In reality, the opposite is true. Banks and other lenders are primarily in the business of earning money by collecting interest on loans that they have made. Their net income is derived by having a specific process in place in order to invest and receive the interest payments. They find it cumbersome to go through the foreclosure process, and usually are not well equipped to manage foreclosed properties.

Because of this, most lenders are willing to work with homeowners because foreclosure are much more costly for them in the long run. It forces them to allocate time and resources to an unprofitable activity. Contact your lender immediately! Do not ignore phone calls and letters from your lender. If you do not inform your lender of your situation, it will be assumed that you do not intend to pay and the legal process will go forward.

While the above excerpt describes most reputable and fair lenders, there are those that hire third party debt collection agencies that may cross the line into prohibited debt collection practices. What are those practices?

A debt collection agency many not harass, oppress, or abuse your or any third parties they contact. For example, they may not

• Use threats of violence or harm;

• Publish a list of consumers who refuse to pay their debts ( except to a credit bureau)

• Use obscene or profane language; or repeatedly use the telephone to annoy someone

In addition, debt collection agencies may not use any false or misleading statements when collecting a debt. Some of those example are, they may not falsely imply that they are attorneys or government representatives, falsely imply that you have committed a crime, falsely represent that they operator or work for a credit bureau, misrepresent the amount of your debt, indicate that the papers being sent to you are legal forms when they are not.

Furthermore, a debt collector may not give false information about you to anyone, including a credit bureau; they may not send you anything that looks like an official document from a court or government agency when it is not or use a false name.

Although it's understandable that this can be an emotionally trying time, it's a good idea to use a notebook and document any and all conversations with any of your creditors. Keep all paperwork and documentation sent to you and store these documents in a file folder along with your notebook.

As each state has their own debt collection laws, the homeowner should report any problems they have with a debt collector to their state Attorney General's office and the Federal Trade Commission. For further indepth and detailedinformation about your rights as a borrower, check out the Federal Trade Commission's website at www.ftc.gov.