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Foreclosure Loss Mitigation Departments Can Help You Save Your Home

By December 26, 2008

Following an unprecedented period of property price inflation, many people are finding that their home is now worth less than what they still owe on the mortgage. Because of job loss and the recent economic downturn, many people are earning less than they did at the time the mortgage was used to purchase the home.

This double whammy has created an economic calamity as record numbers of homeowners, now unable to afford their homes, are filing for foreclosure. A foreclosure occurs when mortgage payments are more than ninety days in arrears, and the mortgage loan is in default. The lender takes ownership of the home, issues a notice of default, and initiates foreclosure proceedings. The lender sells the home to the highest bidder in order to recoup their loan money.

There are appropriate steps in which you can take to keep your home. However, the majority of lenders do not initiate these steps on the homeowner’s behalf. Making sure you avoid foreclosure, make sure you contact the lender before your payments become late. There are options in which you can use, these are called foreclosure mitigation, forbearance, forgiveness, loan modification, repayment plans partial claims, refinancing and short sales.

A forebearance will allow someone to take a grace period free from payments on their mortgage. A waiver from the obligation to pay an overdue payment is known as payment forgiveness. Some plans for repayment will allow part of any missed payment to be added to the payment that is regularly due and can be spread out over a period of time. Modifications to the loan term usually refer to an extension of the period of the mortgage or a temporary freeze of interest rates.

Refinancing refers to the process of completely re-amortizing the loan under different terms. A partial claim refers to the practice of taking another loan from a different source in order to pay missed payments. Like a foreclosure, a short sale results in the loss of a home, but under much better conditions for the homeowner.

Each options must be approved by the lender. In the case the lender has denied a particular option this does not necessarily mean you will not qualify for other foreclosure loss mitigation options. If you are having financial problems in which you cannot pay your mortgage, you should then contact your lender, you should then begin researching all the choices of foreclosure loss mitigation options.

Following the unprecedented time of property price inflation, a lot of us are discovering that our homes are worth less than what we still owe on our mortgages. You may think there is nothing that you can do to keep your home, but there are actions you can take. Lenders are unlikely to initiate these actions on your behalf, so it is important to be proactive. Don’t wait until you’re close to foreclosure due to late payments. Contact your lender and find out if you can initiate one of the following options: refinancing, a loan modification, foreclosure loss mitigation, forbearance, partial claim, or short sales.

- jason ciment

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