subject: Why Loss Mitigation Is The Best Approach Against Foreclosure [print this page] Did you know that all lenders have loss mitigation departments? These departments have the mandate to handle foreclosure negotiations. You have to consider loss mitigation if you are facing the prospect of foreclosure.
Because of the bad economy, you can experience difficulties that will prevent you to fulfill your obligations. Your lender will consider your situation because unexpected situations could make it harder for you to pay the mortgage. Because of the availability of such departments, loss mitigation is still your best option to stop foreclosure.
The lender normally sends a Notice of Default if you fail to pay the mortgage. The NOD could mean that a foreclosure is looming. Once you receive the notice, you must look for different options to solve your problem in order to prevent foreclosure.
Most homeowners will try to refinance or will get a new home loan. Others may opt for a short sale. Still, there are homeowners who will file for bankruptcy. Among all these options available for homeowners, have you considered the loss mitigation option? You can enjoy good benefits if you consider this option to stop the looming foreclosure of your home.
Steps You Need to Follow
Once you receive the NOD, the first step you need to do is to call the lender's loss mitigation department. This is to determine if you can get several options to avoid foreclosure.
You might get an offer for a loan modification. The lender could restructure the existing mortgage loan by changing how you will pay the loan. It is possible that the lender could offer a lower interest rate payment. The loss mitigation department can provide a way out of foreclosure. If you agree to a new term, you practically avoided foreclosure. All you need to do now is to pay the modified mortgage based on the new payment plan.
How Loss Mitigation Works
The loss mitigation department opens negotiations with borrowers. You are expected however to disclose the true reasons why you can not pay the original mortgage. There is also a need for you to show your willingness to continue paying the loan. You can do this by disclosing your preliminary payment plan.
After discussing the important points about your difficulties and your future payment plans, an initial agreement could be reached. After this, a loan modification plan will be drawn up for you.
If you are considering other options, then you should take a look at some serious implications to your credit standing. For example, if you are planning to pursue a new loan through refinancing, you must have a certain level of equity on your mortgaged home. Your credit score must be good in order to qualify for the type of refinancing you want. Qualifying for a new loan can be very difficult if you are already in dire financial trouble. If you opt for bankruptcy, your credit worthiness and financial credibility can be adversely affected for the long term.
There are other strategies to prevent foreclosure. However, none can match the simplicity of loss mitigation. This approach must be used by all homeowners who are facing foreclosures.
Why Loss Mitigation Is The Best Approach Against Foreclosure
