Good day:
With the current foreclosure crisis, you may be hearing the term "loss mitigation" a lot these days. But what is it? Before answering this question, if you are in danger of losing your home to foreclosure the thing you do not want to do is act as if it is not happening. Now, to answer the question about what is loss mitigation. Loss mitigation describes the various techniques that can be used to possibly save your home from foreclosure. Do you remember that document you signed at closing called a mortgage or deed of trust? Well, that is where the details of what will happen if you run into trouble paying your mortgage resides. So, I'd advise you to pull out the old paper and begin reading. Now, don't stop here. Get on the telephone and contact your lender. Be sure to ask for the collections or loss mitigation department. Believe me folks. the bank really doesn't want your home. They want the money you owe them.
Once you have a live person on the phone, begin the discussion by asking what are your options for saving your home. Now let's be realistic here. If you can no longer make the payments due to the four D's: divorce, death, debt or delusion, you may want to consider other alternatives versus loss mitigation. Also, if you've been downsized, right-sized or just can't afford the payments anymore (perhaps due to high gas prices) again, you may want to consider alternative options such as selling, leasing with option to buy to another qualified person, renting etc. (This is a whole nother topic that will be discussed in another blog soon).
The types of loss mitigation techniques include: repayment plan, special forbearance (FHA loans), loan modification, VA loan modification/refunding and partial claim. For some reason if you don't feel comfortable speaking with your lender about your situation, here is where I'd advise you to contact a professional in loss mitigation techniques. You may begin with your mortgage or real estate professional. Be sure to ask them if they have experience in dealing with loss mitigation. If they say no, perhaps they can refer you to someone. The thing you shouldn't do is nothing. Also, know there will be fees involved with hiring someone to assist you with this process. Find out what the cost will be up front for their assistance. Lastly, don't accept advice from those who are not experienced.
If you didn't know what loss mitigation was I hope this has enlightened you somewhat. If you're in danger of losing your home...take the next step. Make the call.