Loss mititation is the process that you can use to save your house from foreclosure. The loss mitigation process is like a dance between you - or someone representing you like a loss mitigation consultant or loan modification attorney - and your mortgage lender to work out a way to get your mortgage payments caught up before you lose your home to foreclosure.
Third party loss mitigation specialists, or loss mitigation attorneys, are in many cases the best way for a homeowner to negotiate with their mortgage lender for two simple reasons.
Why Hire A Loss Mitigation Consultant Or Loan Modification Attorney?
- Loss mitigation consultants are not emotionally attached to the home for which they are negotiating. A homeowner is emotionally attached to their home, which can cloud the homeowner's ability and judgement in negotiating the best deal for the homeowner and that still works for the lender.
- Third party loss mitigation attorneys are more experienced in negotiating than most homeowners. If the loss mitigation attorney is experienced they will know how to work the system to the favor of the homeowner to get the homeowner the best deal on their loan modification, or other solution to save the home from foreclosure. Homeowner's just don't have the knowledge or experience to weave their way through loss mitigation and legal departments of the major mortgage lenders.
A homeowner would hire a loss mitigation counselor, or loan modification consultant/attorney to help them save their home from foreclosure and to keep the homeowner in their home. Loan modification should be one of the first options that the homeowner looks at.
Options To Loan Modification and To Stop Foreclosure
If a loan modification is not a realistic outcome of the loss mitigation process, then there are other options that a homeowner can consider to make sure that they get the most out of their home versus losing the home to foreclosure.
- Mortgage Forbearance - A mortgage payment forbearance is a program that sets up a payment plan to spreadout the missed mortgage payments over a period of time. Typically the length of time is between 6 months and 18 months. If a homeowner opts for this type of program then they need to expect to pay some sort of initial payment to get the program started. It is a good idea that if the homeowner gets behind on their mortgage that they find a way to save the money that they would normally use to pay their mortgage.
- Negotiate a Short Sale - A Short Sale is where a homeowner can sell their home before the foreclosure happens for less money than they owe on it. In order to sell the home for less than the mortgage the homeowner (the loss mitigation counselor) will need to get prior permission from the mortgage lender.
The mortgage lender will need to release the deed from their mortgage lien, and if they don't, it is impossible for the homeowner to sell their home to another individual in a way to give the new homeowner a clear title and deed free of any lender lien. If you are going to try for a short sale it is advised that the homeowner start this process quickly as it might take several weeks to months to negotiate an acceptable sales price for the lender and a buyer.
- Deed In Lieu Of Foreclosure - This process is where a homeowner agrees to sign the title and deed of their home over to their lender for no financial compensation back to the homeowner. In a sense, it is like a non recourse repossession where the homeowner just hands the mortgage lender their house keys and walks away from the home and the mortgage debt.
If a homeowner is considering any of these options, the homeowner needs to make sure that they get in writing from the lender that the lender will completely release the homeowner from any future financial responsibility associated with the home and the mortgage. The last thing that a homeowner wants is to have a financial responsibility on a home that they no longer live in or own.
To speak to a loss mitigation counselor, or to have a loss mitigation attorney look at your mortgage situation please complete the form below:
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