Loss Mitigation
We understand the stress of the harassing phone calls, threatening letters, and that situations can get to the point of what feels like the point of no return when you’re behind on your mortgage payments. We also understand that bad things can happen to good people. Loss mitigation may be the answer for you.
Loss mitigation was created as a shared effort between the federal government and the mortgage industry, formed to help homeowners facing the loss of their homes due to delinquent payments. As part of this process, a professional loss mitigation counselor works with homeowners and their lenders to find an alternative to foreclosure.
Loss Mitigation is just a fancy way to say ‘foreclosure prevention’, and there are alternatives to foreclosure. Some of these options allow the homeowner to stay in their home as well as to protect their credit history. The options available to you will depend on your circumstances and on the type of mortgage you have. For an FHA or VA mortgage, possible foreclosure alternatives are set by those respective federal agencies -the U.S. Department of Housing and Urban Development for FHA loans and the Veterans Administration for VA loans.
The goal of loss mitigation is to work out an agreement between the homeowner and the lender that will stop foreclosure proceedings permanently, and Banks Work With You.com can help you determine which solution is best for you and then stay by your side throughout the process.
To begin with, here are some tips for avoiding the foreclosure process:
1. Don’t ignore the problem . Sometimes, because they are embarrassed, people avoid the problem hoping they can figure out a way to catch up before the problem gets too big. Don’t. The further behind you get in your payments without contacting your lender, the harder it will be to catch up and the less likely it will be that your lender is willing to work with you, so
2. Contact your lender as soon as you realize you may have a problem with your payments. Your lender doesn’t want your home, they want their money and very often they are happy to help you get back into a situation where you can afford your payments. Foreclosure is expensive for lenders. Additionally, HUD, FHA, Freddie Mac and Fannie Mae require lenders to work aggressively with borrowers to help them solve their mortgage problems. They have various options that will be beneficial to both parties and are willing to help. Remember, the further behind you are on your payments, the fewer options you will have.
3. Open and respond to all mail from your lender. The first notices you get will more than likely give you information about foreclosure prevention options. Later mail may include important notices of pending legal action. Not opening your mail will not excuse you in foreclosure court.
4. Understand your foreclosure prevention options. If the situation is over your head, contact a professional and let them help you through whatever process you choose.
If you find yourself facing a temporary situation such as a reduction in income or financial hardship, such as an illness and are temporarily unable to make your mortgage payments but will be able to resume the scheduled payments on your mortgage once the situation improves, Forebearance, Repayment Plan or a Loan Modification might be good options for you.
Sometimes homeowners find themselves facing longer financial hardships such as a long-term layoff, job loss, a permanent disability or long-term illness resulting in a decrease in income or an increase in major medical expenses, or the death of the principal wage earner.
In these instances, it may not be possible to continue to meet all of your financial obligations and the only appropriate course of action is relinquishing ownership of the home, while avoiding foreclosure. At that point, you might need to explore other options such as Selling your home, an Assumption of your loan, a Pre-Foreclosure Sale, or as a last resort, a Deed-in-Lieu of Foreclosure.
Just remember, loss mitigation is about keeping you in your home. However if, after carefully reviewing your case, that doesn’t seem like a realistic outcome, every attempt will be made to help you get as much as possible for your home before a foreclosure sale takes place.
Frequently Asked Questions
Deed in Lieu of foreclosure ?
Pre-Foreclosure/Short Sale?
Repayment Plan?
Loss Mitigation?
Forbearance?
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