Foreclosure is a threatening word, especially to people weighed down with heavy mortgages — not an uncommon situation in the Bay Area. If you're like many homeowners here, you have far less invested in your property than the bank does. In fact, given the extraordinary cost of real estate, you might even carry a second mortgage. In such a precarious position, there is little cushion for misfortune. If your finances takes a turn for the worse and you default on your loan, your mortgage lender may be able to foreclose on your property — i.e., terminate your rights and seize your home.

If you do run into severe financial difficulties, you should speak immediately to your lender about special payment arrangements. In addition, gather up all relevant documents and meet with a financial counselor to work out a stop-gap budgetary plan, taking into account every available resource and option, even those such as a 401-K that are usually off-limits. Preventing further delinquency should be your top priority. A counselor should also be able to assist you in negotiations with your lender. Together, you may be able to create a solution to get you over a rough spot. On the other hand, if foreclosure looks inevitable, a counselor can also educate you about the process and what to expect.

In addition, misfortune has its flipside. If you are currently looking for a home, you may be able to find a bargain, since mortgage lenders are usually interested in unloading foreclosed properties as soon as possible. As a first step, visit the Web site for Freddie Mac's HomeSteps program to search the database of foreclosed properties. However, there are different entry points to the market, competition is stiff, and the process can complicated, so it's best to work with a REALTOR® experienced in foreclosure sales.