Negotiating with the servicer
When you're past due on the mortgage and you realize that you can't catch up, call the loan servicer as quickly as you can, says Cate Williams, vice president of financial literacy for Money Management International, a national credit counseling agency. The phone number will be on the coupon book or monthly bill.

Williams suggests doing a couple of things before making that call. First, cut monthly expenses as much as possible. Many people in mortgage trouble have already done this over a period of months. Next, write a monthly budget in a legible format that you can fax or e-mail to the mortgage servicer.

"Make sure it's realistic and honest," Williams says. "Don't include on your monthly budget that you need your nails done every two weeks."

Have bank statements and paycheck stubs ready, in case the servicer wants copies of those, too.

You'll have to do a tedious song 'n' dance with the collections department. Insist that you want to talk to someone in loss mitigation. Be persistent. Eventually, the collections person will exhaust the scripts and transfer you to loss mitigation.

When that happens, be ready to suggest a remedy. Maybe your monthly principal and interest recently jumped from $1,100 to $1,700. You can't afford the new payment, but you could handle principal and interest of $1,400. You could ask to have the loan modified to a fixed rate with that payment.

Remember, this is a negotiation. When you bought the house, you had a walk-away price for the property -- if the seller refused to go below that price, you would walk away and buy another place. Similarly, you need to figure out, before calling the servicer, the maximum monthly payment you can afford and what terms you're willing to accept.

"Be in a negotiating position, rather than in a position of being told," Williams says. "Be persistent. You need to get to somebody that has the ability to make a decision."

While being a persistent, tough bargainer, you also have to acknowledge that you can't get everything you want. If you must leave your house, try to do it as much as possible on your terms -- with the least possible damage to your credit report, your family life and your physical and mental health.