If your home is in danger of being foreclosed upon and you want to stop the process before it even begins you might consider loss mitigation. This is a process whereby one tries to work with the bank to keep the homeowner in their own home. While this might seem like something that you, yourself can do, be forewarned that loss mitigation is a complicated process and it’s best that you hire a professional with expertise in this area if you want the best outcome.
Anyone who is facing the loss of their home is bound to be overly emotional. But when dealing with the bank one needs to be levelheaded which is why it’s recommended that you get a third party loss mitigation expert to go between you and the bank. What this person will do is negotiate to find the best terms for everyone that will allow the bank to get their money and the homeowner to keep their home.
The first thing they will probably do is try to come up with a modification to the loan or some type of repayment plan that the homeowner can realistically abide by. The problem here is that it also has to be agreeable to the lender who can often be unbending in their rules. Sometimes they may be able to get the loan extended which will then lower your payments and other times it may include getting a second loan to pay off the amount you are in arrears.
Depending on your current level of income and how far behind you on your payments, it may not be possible to work out a payment plan that is reasonable for the homeowner and the bank. In this case, the loss mitigator will work towards getting you out of your mortgage before foreclosure proceedings can mar your credit. This could include finding a well-financed buyer for a short sale or negotiating a deed in lieu of foreclosure in which you convey the property to your lender who then can sell it to recoup their losses.
If you’re facing foreclosure, knowing the laws in your state and your rights when it comes to foreclosure is critical. While hiring someone to help you through the loss mitigation process might hurt you a little bit financially upfront, it’ll probably pay off in the long run because you end up getting a much better deal with someone who knows the rules and how to play the game.
