WHAT IS LOSS MITIGATION?

When a homeowner struggles to make mortgage payments, their lender may step in to initiate loss mitigation. Loss mitigation refers to the process in which a lender offers relief or repayment options to struggling homeowners. While not always possible, the goal of loss mitigation is to avoid foreclosure.

What kind of loss mitigation options do homeowners have?

There are several loss mitigation options that lenders may offer to homeowners who are having difficulty making their mortgage payments. Some of these options include:

• Loan modification: This involves changing the terms of the loan, such as by extending the repayment period or reducing the interest rate, to make the monthly mortgage payments more affordable for the homeowner.
• Repayment plan: A repayment plan allows the homeowner to catch up on missed payments by making extra payments on top of their regular monthly mortgage payment.
• Forbearance: This option allows the homeowner to temporarily stop making monthly mortgage payments or to make reduced payments for a set period of time.
• Short sale: In a short sale, the lender agrees to accept less than the full amount owed on the mortgage when the homeowner sells their home.
• Deed in lieu of foreclosure: In a deed in lieu of foreclosure, the homeowner voluntarily transfers ownership of the property back to the lender in exchange for the lender forgiving the debt.

Is the lender required to provide homeowners with all loss mitigation options?

It's important to note that each lender may have different loss mitigation options available, and the specific options offered to a homeowner will depend on individual circumstances. It's also worth mentioning that not all homeowners will qualify for loss mitigation, and the extent of loss mitigation options can depend on factors such as:

• How recently the homeowner has received prior loss mitigation options;
• The basis of the homeowner’s hardship and current income;
• Whether the loan is insured by the federal government; and
• Whether the loan is owned by a government-sponsored enterprise, such as Fannie Mae or Freddie Mac.

What steps should a homeowner take to pursue loss mitigation?

Homeowners should diligently work with their lenders early-on in the loss mitigation process to avoid foreclosure. It is worth noting that the loss mitigation process doesn't always move along a straight line -- it can be a frustrating, difficult, and ultimately cumbersome process that requires a lot of paperwork and back and forth with the lender. However, with diligence, open communication, persistence, and in many instances the guidance of an experienced attorney, the loss mitigation process can ultimately avoid a foreclosure.

If you would like to learn more about loss mitigation options, an experienced attorney can help you navigate the process. At The Law Center, we are a team of specialists that are passionate about the foreclosure process from start to finish and helping homeowners at the highest level. Our staff and attorneys approach each client and each property as a new challenge, one that requires thorough analysis, zealous representation, and thoughtful strategy. It’s your home, let The Law Center help you defend it.

Call us now and speak with a foreclosure expert on how you can make the foreclosure process work for you -- not against you. (312) 600-8815

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