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At a time when they should be looking forward to retirement, many older Americans are facing the looming possibility of foreclosure. According to a recent report from AARP's Public Policy Institute, more than 1.5 million homeowners age 50 or older have lost their homes to foreclosure since the mortgage crisis began in 2007, raising the foreclosure rate among this group from 0.3 percent in 2007 to 2.9 percent in 2011.

Those 75 or older are in the worst shape: In 2007, one of every 300 homeowners in this group was in foreclosure, and that number has since increased to about one in 30, according to the report.

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Fortunately, there are steps older Americans can take to protect their homes from foreclosure. U.S. News spoke to real estate and financial experts, who outlined these preventative measures:

1. Don't panic--take action. If you're realizing you can no longer afford to pay your mortgage, instinct might tell you to crawl under your bed or hide under the covers, but don't give into the initial panic. "Take action immediately when you feel like things are going south," says Jean Setzfand, AARP's vice president of financial security. Contact your lender right away to find out what assistance programs you're eligible for, and what the best course of action is.

2. Shrink your expenses with a government-approved counselor. Significantly slashing your budget may enable you to continue paying your mortgage. Go through your monthly budget with a fine-tooth comb to determine what expenses can be shrunk, and then shift those extra funds toward your mortgage payments. If you need budgeting help, the U.S. Department of Housing and Urban Development can connect you with a HUD-approved housing counselor, who can offer free advice on how to reduce your expenses.

3. Look into refinancing your loan. One way to avoid foreclosure is to refinance your loan. Seek help from, a program of the Departments of the Treasury and Housing and Urban Development designed to help homeowners get mortgage relief and avoid foreclosure. Through the Making Home Affordable program (MHA), you can explore financing options to take advantage of today's low mortgage interest rates and reduce your monthly mortgage payments. You might qualify for MHA's Home Affordable Refinance Program (HARP), which would enable you to refinance from a high 10 or 11 percent rate down to today's average rate on a 30-year fixed mortgage of approximately 3.5 percent. "Even if you've been down the road of a loan-modification process two or three years ago, they've now shifted," says Susan Wachter, a professor of real estate and finance at the University of Pennsylvania. "Loan-modification programs are far more borrower-friendly now than they were in 2009. So it's worth it to try again."

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"If you can lock a low rate down to refinance for the next 30 years--anything below 4 percent is amazing," says Svenja Gudell, senior economist for Zillow, an online real estate database. Gudell adds that many markets where older Americans have been hit with foreclosure warnings, such as California and Florida, are beginning to see a turnaround. "Home values are going back up in those areas," she says. "A lot of people that aren't far underwater in their homes will soon be in positive equity territory again." Staving off foreclosure with a loan refinance is one way to buy yourself more time to wait for the housing market to rebound.

4. Consider a reverse mortgage. People older than 62 often qualify for a reverse mortgage. With a reverse mortgage, you receive money from your lender and generally don't have to pay it back for as long as you live in your home. The loan, plus accrued interest, is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage are generally tax-free, and many reverse mortgages have no income restrictions.

However, a significant downside of reverse mortgages is that they come with high closing costs, which often exceed the closing costs of a standard home purchase. As such, they can substantially reduce the value of your home. Nonetheless, this may still be a good option for older Americans who have maintained a substantial amount of equity in their home, says Linda Fisher, a law professor at Seton Hall University who specializes in foreclosures. Fisher recommends talking to a HUD-approved housing counselor or a reverse mortgage counselor. A reverse-mortgage counselor may charge up to $125, but Fisher says it's a "minimal expense" for being able to keep your home.

5. Be wary of foreclosure scams and fraud. A growing number of scammers are trying to take advantage of people looking for foreclosure help, so be wary of predators. "Senior citizens, in many cases, can be more trusting because of the era that they grew up in," says Patrick Butler of Butler says to beware of anyone who asks for upfront fees, which is illegal. To avoid a foreclosure scam, the MHA advises: "do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt," according to its website. To make sure you're receiving help from a trusted relief program, consult with a HUD counselor.

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6. Explore a short sale if you've exhausted all other options. If you can't find a way to keep your home through a loan modification or a reverse mortgage, one potential exit strategy is through the Home Affordable Foreclosure Alternatives (HAFA) Program.

Not long after the Home Affordable Modification Program (HAMP) was put into place, the federal government launched HAFA. This program enables you to short-sell your property, meaning the mortgage company allows you to sell your house for an amount that falls "short" of the amount you still owe. "It's pretty much a way that you can walk away from the home if you cooperate," Butler says.

Unlike with conventional short sales, a HAFA short sale releases you from your primary mortgage debt obligation after selling the property. In many cases, a relocation assistance incentive of at least $3,000 is paid to the homeowner. Some banks are now paying significantly higher incentives to struggling homeowners to increase the usage of the program, Butler says. For more information on HAFA and HAMP, visit

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