During the "great recession," homeowners had to navigate two hardships. Mass layoffs and unemployment lead to difficulty with family budgets, including making the mortgage payment. In addition, home prices rapidly dropped - often preventing owners from selling their home (also known as "underwater" with the mortgage).

Although much has changed since then, for this discussion let's pretend it is 2008 and a previous client has contacted you for advice. Help them with the following questions, based on the material in Unit 10. Let's assume they don't have the funds to make the payment immediately, and their grace period is about to expire.

1. What is one action they can take today to reduce the risk of foreclosure?
2. Let's assume your client has an FHA or VA loan. What added benefit would they have?
3. In a panic, your client decided to cancel their homeowner's insurance to reduce the monthly payment. What action is the lender likely to take, and why is a lender consider this a form of default?
4. Let's assume that they are underwater in their mortgage - if they were to sell their home, they would still owe the bank $20,000. Does your client have any options available if they have no other choice but to sell?