Loss mitigation is the process of trying to stop a home foreclosure before it occurs. It is a process that can be led by a representative of the lien holder or a third-party that is working for the distressed homeowner.
It is often better for a disinterested third-party representative to handle the situation because he or she can impartially work with a lending company without any emotional feelings.
Loss mitigation was introduced as a collaborative effort between the federal government and the mortgage industry many years ago. Contrary to popular belief, it wasn’t something started because of the sub-prime melt down! The program was established to help homeowners who were facing the loss of their homes because of delinquent payments and hardships.
It is nearly impossible to complete a successful short sale without dealing with the loss mitigation department at the bank. And how you deal with loss mitigation department is critical to a successful transaction.
Some bank customer service representative may say that the bank does not have a loss mitigation department. Keep trying! All banks have the department for which you are looking, but it just may be recognized under another name. Ask if the bank has a loan
“work-out,” foreclosures and/or short sale department.
There are several options when it comes to loss mitigation, but the main focus must be to keep the homeowner in his or her home if possible. A loss mitigation professional will first seek to set up a loan modification plan or a repayment plan ( a.k.a forbearance) that is realistic for the homeowner, as well as agreeable to the lending institution. With the repayment plan, it is imperative that the plan be realistic when it comes to the homeowners ability to repay the amount that is delinquent.
Obviously, there has been a prior financial situation so the solution must be beneficial to the homeowner.
Loss mitigation is about keeping the homeowner in his or her home. If that does not seem like a possible outcome, every attempt should be made to help the homeowner get the most for his or her home. Hopefully, a foreclosure sale can be avoided — it’s always the last resort for all involved parties. This may include deed-in-lieu of foreclosure or a short payoff if a qualified purchaser can be found.
Once a deal is accepted, it’s critical to get it in writing immediately. Find a buyer or arrange financing and get the deal closed. You don’t want anything to happen between the acceptance and the closing to make you lose your deal.
Take the time to know what your rights are in the foreclosure process. It is possible to use the loss mitigation process to get back on track with your mortgage. Lenders ultimately want to keep the homeowner in the home and it is up to the homeowner to show that he or she will be able to catch up or maintain the mortgage payment in the future.
Today’s lenders have more foreclosures than ever. They don’t want properties, and as a result, are very willing to help if the documents and numbers make sense.
Treat them with the respect they deserve and you might be surprised what might happen!
James Gage started out with no money, a desire to succeed and a great amount of common sense. With these ingredients, he mastered the real estate market in a very short time and began creating concepts and techniques that are the backbone of the Gage Success Formula. To date, thousands have taken Jamesâ€™ one-on-one training programs/seminars and these students use his formula everyday to become financially independent. If you would like to take your negotiating to the next level, give him a call at (508) 595-9567.