In foreclosures, lenders end up with essentially the liquidation value of the house. Lender loss Mitigation workouts typically take 45 to 60 days to complete. Because of the current national subprime mortgage meltdown, lenders are overwhelmed with claims. Lenders have a three year period to file a deficiency judgment but it is limited to the balance of the loan in default after the Foreclosure sale proceeds have been applied.

Loss Mitigation is not a well known term to the general public and your lender is not always telling you about it. Loss Mitigation is the process by which the mortgage company will re-negotiate the terms of your loan. Your lender does not want to take your home. The phone calls and letters you are getting are from the collections department. Do not be surprised by their high pressure “you better pay now or else!” attitude. Loss Mitigation is that rare company that actually does what it says it can do and extends itself to care about their clients.

The Loss Mitigation process can be led by either an employee or representative of the lean holder or a third party that works strictly for the best interests of the home owner. Loss Mitigation is made more attractive by the fact that Foreclosure costs are often substantial. Historically, the Foreclosure process has usually taken from a few months up to a year and a half, depending on state law and whether the borrower files for bankruptcy. Loss Mitigation is essential to asset protection because it provides the borrower with information necessary to make good decisions. Learning the programs or “tools” available as an alternative to Foreclosure is the key to preserving home ownership.

Mortgage servicers today are in need of a solution to automate the complex decisions required to create the optimal scenario for each individual borrower. Decision-making and process automation that enable the quick computation of borrower financial information, loan information, investor and client conditions, and integrate assessments for net present value of the asset, borrower financial score, risk and regulatory policies.

Mortgage companies have various programs with various qualifications, but Loss Mitigation is one of the first options that homeowners should attempt in trying to save their homes. While it is widely recommended for homeowners to work with the lender on their own before involving any third party company to negotiate on their behalf, many homeowners do not know how to get passed the collections department, or how to negotiate arrangements that are in their best interest.

An offer made by the lender for the repayment of the arrearages will most often be what the lender thinks the homeowner can afford, not what the homeowner can stay on schedule with. When you are facing Foreclosure, by all means call your lender first to try working out an arrangement. If you call early enough in the process, you can usually avoid the Foreclosure process altogether.

Beyond that, you need a third party who is experienced in Loss Mitigation and working with the lenders. The company I recommend is Freedom Foreclosure Prevention Services (FFPS). Their track record is best spoken by their satisfied clients.

To recap, Prevent Foreclosure by first contacting your lender early. The second step is to contact a Certified Loss Mitigation Consultant with FFPS.

Jim Hutchinson
Certified Loss Mitigation Consultant