Loss Mitigation - a Set of Tools to Stop Foreclosure

By: Jeff Manzanares

What is loss mitigation?
You can be sure that there are a lot of people who do not have the faintest idea what this expression means. For that matter, there are a lot of terms in the finance field that are rarely used by most people in everyday conversation.
If you are now facing a home foreclosure, you are looking for answers-
answers that will explain what all this "foreclosure" terminology, means in simple-to-understand words. Rather than define all these confusing financial terms at once, let's look at loss mitigation and explain how it may be a "weapon" that you can use to defeat your home foreclosure.

Loss Mitigation...
A course of action that is available to you, the homeowner, and a process that will enable you to stop home foreclosure. That is correct; you the homeowner have the power to request negotiations with the lender.(Imagine that)
Not only can it stop the foreclosure process, but it can help you save your family home and the equity you have built up. The lender agrees to assist the borrower (you) by working out an agreement to help you stay in your home and restructure your loan payments. Loss mitigation is a set of tools the lender uses to stop foreclosure.
Which could include:

> Special forbearance agreement
> Loan modification / Mortgage Refinance
> Partial claim
> Pre-foreclosure sale
> Deed-in-lieu of Foreclosure

An agreement between the lender and homeowner to repay past due payments within an agreed upon period of time is the goal of loss mitigation.
Any of the previously mentioned tools or combination of each can be used by the lender to enforce the agreement.
Your current situation...
Your current situation is important in the process, because you are now behind on payments and in danger of defaulting on your home loan. This information needs to be very clearly and succinctly described to the lender. Communication with your lenders is very important.
Do not hesitate to tell your lender all the facts. When they understand your situation completely, your lender will be more able to help you find the right solution.
You must remember this is business and the lender will approach the negotiations that way. Your job is to put a face/family in front of them and make sure they understand the situation you are facing. If you have recently faced any hardships such as:

> being laid off at work
> going through a divorce
> medical bills
> health issues - resulting in loss of income

The lender MUST know this information.
These few are just examples of what the lender will take into consideration when trying to help you stop the foreclosure process. Your hardship and financial circumstances will be taken into consideration.
The negotiations...
The outcome of the negotiations usually results in your existing loan being re-established or modified to some degree. Loss mitigation does not involve you losing your home or the equity you have accrued. In addition loss mitigation is not dependant on your credit rating.
There is help...
As stated earlier loss mitigation is a process available to you. That does not mean that you have to go into your lender alone. In fact if you use a reputable firm, your chances of negotiating with your lender (to benefit you) elevate significantly.

This is not a game; you are facing the possibility of losing your home to foreclosure. Be sure you check out the company before you consider using them. You definitely want to work with a reputable establishment.
The loss mitigation firm will work with you to customize a plan that will fit your individual circumstances.

The benefits of loss mitigation negotiations...
It is a process that you and your lender enter into. This course of action is meant to cut the losses incurred by both parties. If the lender has to foreclose on your property it actually will cost
them more than taking time to work out a solution with you NOW!
You keep your home and equity, and the lender has halted the foreclosure process and has an agreement with you to continue your (altered) mortgage payments.

One final point...
You must always remember when you are facing a home foreclosure that time is your enemy. The clock is always running. Even while you are
negotiating with your lender...the clock never stops ticking.

Tick-tock, tick-tock, tick-tock...
The best of luck during your Loss Mitigation negotiations.

Foreclosures
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