By JOHN HANEY
6 News Anchor/Reporter

KNOXVILLE (WATE) -- Many homeowners are living in fear of foreclosure. But there are steps you can take to save your home.

It's important to note that nobody wants a foreclosure because that's not how lenders make their money.

But it you're falling into trouble with your mortgage payments, the first thing you should do is pick up the phone.

According to Chuck Bailey, a broker with Knoxville Mortgage, "If they're getting into any kind of trouble, as quickly as they can, call the lender. Each lender has their own way of dealing with it, so they've got programs set up to be able to help people out of the situations that they're in."

Lenders may offer what's called forbearance, a period of time to make reduced payments while you try to turn around your financial situation.

Or you may be able to restructure your mortgage for a lower monthly payment.

"After they've been in the house for two or three years, the prepayment penalties have dropped," Bailey says, "They can go back if their credit has improved and get a better interest rate, a fixed rate for 30 years, and they can be in a whole lot better situation."

Another option is called a cash out refinance, which takes advantage of the equity that's already in the home.

Buyers in financial trouble can use that cash to pay off credit card or other high interest debts and then be better able to meet their monthly mortgage payments.

Nationwide, 437,000 homes landed in foreclosure in the first three months of this year. That's 120,000 more foreclosures than in the same time period last year.

Critics say during the housing boom years, lenders made it too easy for people to get mortgages and many were unqualified to borrow.