Loss Mitigation is the process of minimizing or stopping a loss and hopefully concluding with a reversal of your situation leading to future gains.
A solid loss mitigation plan should be in place for financial recovery or foreclosure prevention or foreclosure help similar to building a house. Hopefully you wouldn’t begin building a house without a blueprint. Unfortunately too many people do and end up with something they need to consider using for their dog and not their family.
There are many different options and first of all you should establish your goals. For homeowners with the goal of foreclosure prevention they would likely consider options like Loan Modifications, short refinance negotiation, a short sale negotiation or a deed in lieu of foreclosure.
For many who choose Loan Modification the next logical step would be to decide if you will need a Principle reduction, interest rate reduction, special forbearance or elongation of the loan term. Keeping in mind you can use 1, all, or some of these components.
Looking at the pros and cons of each option will be affected by conditions such as cash-for-keys negotiation, or a partial claim loan or other loan work-outs.
This should be a very personally detailed evaluation. Time should be taken to address all the beneficial options and if professional help is available and affordable it may end up being the most important step you take towards financial responsibility.
Types of Loss Mitigation
Loan modification is defined as a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower. It can also be referred to as Mortgage Loss Mitigation or Loan Loss Mitigation.
Cash-for-keys negotiation: Is a loss mitigation strategy for a bank due to their evaluation that it is worth paying a homeowner to leave the home in good shape and in a timely manner based on the associated fees with a homeowner damaging the property or requiring an eviction order.
Special Forbearance is defined as a temporary suspension of the monthly mortgage payment. This is typically permitted for certain financial hardship situations and typically can last up until 2 years. Additionally, an expected repayment date is normally scheduled which may provide for resuming the previous monthly payment or may add the additional missed payments over time.
Short sale is defined as a process whereby a homeowner is permitted by the lender to sell their home for less than the principal balance of the homeowner's mortgage. This enables the homeowner to sell the home for the present market value of the home. A homeowner typically considers this option when the property is worth less than the amount owed on the mortgage.
Short refinance: Requires a homeowner to find financing through a new lending source and the current lender permits a sale at market value if the new lender supplies the money. Deed in lieu: A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.
Partial Claim option is made available by the United States Department of Housing and Urban Development. In this option a lender will advance funds on behalf of a homeowner in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI). Currently, these promissory or "Partial Claim" notes due to HUD assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property.
Loss Mitigation Services can be very useful in preventing a problem from gettting worse or getting you back on your feet after an unexpected financial hardship takes place. Loss Mitigation Las Vegas is comprised of some of the most experienced service providers in the industry.