What is "Loss Mitigation"?

In the past Loss Mitigation was an internal lender term in which borrowers in trouble with their mortgage would be transferred to the Loss Mitigation department. In trouble means 60 days behind on your payments. Foreclosure starts after 90 days.

These departments were never very heavily staffed as defaults were not a large part of any lenders’ portfolio. So that being said you were offered a repayment plan and if that didn’t work then they simply took your house. Each State is different in the amount of time it takes to evict a person from their home but the end results are the same.

Today Loss Mitigation also refers to a new industry in which a Loss Mitigation firm acts on the borrowers behalf with the lender. Working with your lender we can work within a framework of programs that are available to you, the borrower.

Most lenders will typically ask for the most first, and then over time and many phone calls will offer a myriad of solutions. This is the process which we can avoid up front since we have relationships with the people who actually make the decision, not just a line collector.

Our first job is to find out what exactly you would like to accomplish. Do you want to stay in your home or sell it? Once we establish your goals then we need to prepare a “work out” package. This consists of your budget, several weeks of pay stubs and perhaps a recent tax return. In addition if you are in a hardship we will ask you to provide a letter of explanation in order to present to your lender a clear and concise picture of your situation.

Once your goals and package have been established this is when the real work begins. Your work out package will be a key determining factor in what we can negotiate with your lender and what exact program fits your immediate and long term needs and goals.

It must be stressed that no matter what any other Loss Mitigation firm tells you there are no guarantees of success since ultimately your lender makes the final decision. However, given the current state of the lending industry we can say that lenders in general are quite willing to work with us toward resolution.