How Loss Mitigation Can Save Your Home

Trying to save your home from a foreclosure can prove to be a difficult time. There are a lot of people that simply give up and let the lender take over the house because they think that it is better to start with a clean, fresh slate. While this may be appealing at first, it is seldom your best option. A foreclosure is something that you do not want on your record. It will be there for many years and it will be hard to buy a house again. If you ever want to buy another house in the future, you will need to do your best to leave this one on good terms. If you are in trouble financially, loss mitigation could be your best bet because they can step in and help you out of a bad situation.

What is Loss Mitigation?

Loss mitigation is when a third party company steps in and tries to help you keep your house. They will work on your behalf and represent you in negotiations with the bank. This can be a great alternative to losing your house or trying to do everything yourself. There are many loss mitigation companies out there that are willing to help you get through the rough times. 

How it Works

When you start to fall behind on your mortgage payments, sooner or later you will fall into default. The lender will notify you of this default with a letter in the mail. The paperwork will require that your entire balance be paid immediately. However, most banks will work with you for a mutual resolution. 

Loss Mitigation Companies

A loss mitigation company negotiates with lenders every day and has experience working with them. They will take the information that you give them and contact the bank. They will negotiate with them until the terms of the loan have been modified. They will then notify you of the new terms of the loan and let you know what you can expect. Typically the loan payment will be lower and you will be current again on your account. 

The company will have a fee schedule attached to complete their work so be sure to know everything upfront. Most of the time, you are required to sign paperwork allowing them to negotiate on your behalf. Be certain that you understand everything you sign and ask all the questions you need.

You will be expected to get back on a regular schedule and stick with it. If you run into problems again, the bank will not negotiate with you so easily. Although a loan modification can help you keep your house, it is not without problems. Your credit will be negatively affected by this type of procedure. However, it will affect your credit much less than if you were to let your home be foreclosed.