Distressed homeowners have several available options to avoid sliding into foreclosure, whether it’s negotiating short sales or working with lenders to adjust their monthly mortgage payments.

The latter solution is referred to as a loan modification. And financial institutions — especially in this turbulent market — will often rework loans to ensure that families can afford to stay in their homes.

That’s what it is supposed to do, anyway. Today an alarming report indicated that homeowners are having trouble paying their mortgages despite having them tweaked.

Here’s a snip:

“More than half of delinquent borrowers who had their mortgages reworked earlier this year to avoid foreclosure were behind on their new loan payments after just six months, a federal regulator said yesterday. John C. Dugan, US comptroller of the currency, told a housing forum yesterday that data his agency is collecting show the increase in repeat defaults by homeowners is ‘remarkably high.’”

Perhaps more troubling is the finding that homeowners who have their loans modified are having trouble making the reduced payments just six months later and are “redefaulting.” One reason for that, according to the report, is that several of the modifications actually end up costing homeowners more each month after “rolling in past-due principal, taxes and insurance.”

That doesn’t appear to be a very attractive solution and more than likely only makes a bad situation worse.

So what are cash-strapped homeowners supposed to do?

The most important thing to keep in mind is that it’s best to identify and address the situation as early as possible. Contact the lender and tell them your situation. If you meet resistance or feel that the options presented to you are not good then make a few more phone calls.

There is likely a local, county or state counseling service that can point you in the right direction. Be sure to also reach out to the professionals at CreditLawGroup.com who are always standing by to lend a hand.

The worst thing you can do is nothing … or not give it 100 percent effort.

More than 7.5 million American people — almost 15 percent of homeowners nationwide with mortgages — spent half their incomes or more on housing costs in 2007, according an Associated Press report that examined data just released by the U.S. Census Bureau.

In addition, about 19 million homeowners — nearly 40 percent of homeowners throughout the nation — are now considered “financially burdened,” spending at least 30 percent of their incomes on housing.

That’s bad news for countless families located across the United States who are finding it harder and harder to make ends meet.

Of course, hindsight is 20/20. And if mortgages were issued correctly perhaps it could have helped minimize the recent affects of the housing downturn on both sides of the deals (lenders and borrowers).

To do that, lenders and buyers across the board should have followed a safer debt-to-income ratio standard that historically hovers around 28 percent.

Here’s how that looks:

• Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income

$3,750 Monthly Income x .28 = $1,050 allowed for housing expense

$3,750 Monthly Income x .36 = $1,350 allowed for housing expense plus recurring debt

Clearly, this is not the only reason behind the current economic mess, but it is certainly a contributing factor. Mix in balloon mortgages, rising debt, unemployment, fuel prices and several other ingredients and we can see the reason foreclosures are occurring and the economy is struggling.

For information on how to avoid and/or stop foreclosure click here.

… is literally upside down, including everything inside it.

This is some rather clever construction; however it is certainly not the most practical home ever built.

In fact, according to an article from Reuters, the inverted residence is unsurprisingly more for spectacle than it is comfortable living.

Those who have visited the home have reportedly felt “dizzy and disorientated,” which is perhaps how countless homeowners here in the United States likely feel who are currently upside down on their mortgages.

Indeed, the current downturn in the real estate market has affected numerous borrowers nationwide who now owe the lenders more than their homes are actually worth.

The good news is that banks today are more willing to renegotiate loans for those who are in this type of situation to avoid tacking more foreclosures onto their books.

So if you can’t ride out this economic storm contact your lender sooner rather than later to determine any and all available options.

It will certainly make you feel a little lightheaded — in a good way — by relieving all that stress.

The Mortgage Forgiveness Debt Relief Act of 2007 helps American homeowners avoid foreclosure by protecting them from higher taxes when they refinance their home mortgages.

President George W. Bush signed it into law on December 20, 2007.

Here’s a snip from “Dubya:”

“When your home is losing value and your family is under financial stress, the last thing you need is to be hit with higher taxes. So I’m working with members of both parties to pass a bill that will protect homeowners from having to pay taxes on canceled mortgage debt.”

The Act creates a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive, according to WhiteHouse.gov.

For more on the Mortgage Forgiveness Debt Relief Act of 2007, including fact sheets and other important details, click here.

… this is certainly not one of them:

“An upstate woman is accused of setting her house on fire the night before it was to be foreclosed…. Deputies said [she] poured gasoline in the house and set the fire…. On the day of the fire, a deputy had posted a foreclosure lock-out notice on the door of the home.”

Of course, the individual is innocent until proven guilty in a court of law. However, homeowners enduring the foreclosure process are often so distressed that it overwhelms them mentally.

That’s because losing a home is simply financially and emotionally devastating.

The sad part is that now more than ever lenders and banks are willing to work with homeowners in foreclosure to resolve or “workout” their situations — it doesn’t have to go this far.

Help is literally just a few phone calls away and it is often free of charge. In fact, state and local governments — even Capitol Hill — are working harder to provide programs and solution to ensure that families remain in their homes.

If you’re reading this then get started today right here. Put out the foreclosure fire before it even starts … don’t start one.