To Effectively Stop Foreclosure, Loss Mitigation May Be The Solution
When it comes to finding ways to stop foreclosure, loss mitigation could easily be the best option available to you and to your bank as well. All banks have a loss mitigation department filled with highly-trained staff, all of whom are all there specifically to help you avoid foreclosure.
Banks aren’t in the real estate business. They don’t make money by taking your home. They make their profits by lending out their money and then charging interest on that money until you pay it back. When you stop paying your mortgage the bank stops making a profit.
It’s in everyone’s best interests to find a way to let you keep your home and get your mortgage payments back on track. All they want is for you to begin paying your repayments again so they can resume making profit. If this means the bank can avoid starting the proceedings for foreclosure, loss mitigation specialists will happily work with you to find the best solution possible.
Foreclosure loss mitigation could include approving a loan modification for you, which could mean reduced monthly repayments, reduced interest rates, forgiveness of any penalty fees and charges or even an increase in the total loan term.
In some instances you might be in a position where you prefer to sell your home and get rid of your debt altogether. If you owe more on the balance of your mortgage than the amount you’ll get on the sale of your home, then this is called a short sale.
Instead of foreclosure, loss mitigation can negotiate with you to accept the lower sale price of your house and then forgive the shortfall on the remaining debt. Of course this means you’re stuck with the problem of finding somewhere else to live. You may also find that the amount the bank has to forgive is reported to the IRS as income, which means you may end up with a tax bill on top of everything else, so perhaps this should remain a last resort option to discuss.
Another option you can consider instead of foreclosure, loss mitigation staff are allowed to negotiate for special forbearance in certain specific circumstances. This is where they agree to let you make no monthly payments at all for an agreed amount of time. Once the forbearance period has ended, hopefully you’re in a better financial situation so you are able to negotiate for reduced repayments to help you get back on track as a good paying customer of the bank.
When it comes to discussing foreclosure, loan mitigation can be an ideal solution. However it’s always wise to remember that this is a specialized area of lending and should be best handled by a profession HUD-certified advisor to be sure you’re getting all the intricacies correct.