What is loss mitigation?
Loss mitigation is an important option for homeowners in an increasingly troubled housing market. Unfortunately, many do not know about the options that loss mitigation provides to allow you to overcome your current mortgage troubles.
The goal of loss mitigation is to work out a solution that benefits both lender and borrower. Neither party wins when a homeowner walks away, (especially lenders) so lenders have a lot of incentive to come up with a solution. While you can represent yourself during the process, it is often best to use a third party. Our experience and understanding of the process will prove invaluable in reaching the right solution. We also find that our neutrality in the situation puts us in a better negotiating position with the lender.
As we previously mentioned, nobody wins when a homeowner can’t pay his or her loan. The federal government and lending institutions know this and established loss mitigation as a means of working out a desirable solution for all parties involved.
There are five loan mitigation programs to utilize. Through our consultation, we will determine what program is the best for your situation. To successfully put you on a better financial path, it’s important we match you with a program that will work for you now and into the future.
The five programs are as follows and you can read more about them here:
Special Loan Forbearance
Creates a repayment plan for you the borrower to cover the dues and get current on the loan until you can make the usual payments through a structured payment plan or loan modification.
Qualifications
- You have suffered a verified loss of income
- Living expenses have gone up but you have enough to cover the dues and get current on the loan
- You occupy the property as your primary residence
- Your property should not need repairs which may affect payments under forbearance
Timeline
- You must be delinquent for 3 months but not more than 12 months
Loan Modification
Permanently changes the terms of your loan – the dues are included into the loan balance and re-amortized at a reduced rate of interest.
Qualifications
- You have suffered a verified loss in income or increase in living expenses (but have stable surplus income to help pay at the modified rate and terms)
- You remain as the owner occupant and the property is your primary residence
- You have a loan at above market rates and a low loan-to-value ratio
- You are not delinquent but may soon default on the loan or you’ve recently defaulted
- Your property is in good physical condition and doesn’t need major repairs
Timeline
- You are behind on payments for 3 months or more and 1 year has passed since you signed the loan documents
Short Sale/ Pre-foreclosure Sale
Sells off your property to pay off the debt, though property value has declined to less than the money owed. Your lender agrees to a sale at less than loan value and accepts the proceeds as the mortgage payment. The sale may not provide you with enough cash to pay down the loan, but it will save the lender from paying the costs of foreclosing and selling.
Qualifications
- You can verify loss of income
- You have negative equity of not more than approximately 63% of the unpaid loan balance
- You occupy the property as your primary residence (If you don’t occupy the home you may qualify but you have to prove that the need to vacate is related to the cause of default)
- You can convince the lender or the servicer that you will be selling off the property within 3 to 5 months
- Property has a marketable title and if there are junior liens they can be resolved
- There is no serious damage to property. If damaged, cost of repair should not exceed 10% of the repaired appraised value
Timeline
- You have been delinquent on your loan payments for at least 2 months prior to the closing date of the pre-foreclosure sale or you are likely to be in default soon
Deed-in-lieu of Foreclosure
Deed in lieu of foreclosure is a process in which you give away your property to the lender because you just can’t pay any more. The lender then sells off the property in order to retrieve a part or whole of the loan balance you owe. You walk away.
Qualifications
- You are unable to continue any payments
- You occupy the property as your primary residence (If you don’t occupy the home you may qualify but you have to prove that the need to vacate is related to the cause of default)
- Property was not used as a rental property for more than a year
Timeline
- The loan is in default (You’ve been 30 days or more behind and the the cause of the default cannot be eliminated)
Partial Claim
Placing your past dues into a subordinate 2nd mortgage (not exceeding 12 months of PITI) payable to HUD (2nd loan payment to begin only after first mortgage is paid off; there’s no interest for the 2nd loan )
Qualifications
- You have an FHA loan or mortgage offered by Freddie Mac approved lenders
- You are unable to qualify for forbearance
- You use the property as your primary residence
- You can prove that your financial hardship is over
- You may qualify even after filing for bankruptcy but court approval is required
- Property should be in good physical condition
Timeline
- Delinquent for 4 months but not more than 12 months
Loss mitigation is a time-sensitive option and it’s important you take action today. The more time you have on your side, the better chance you have of securing a positive outcome. Of course, even if you don’t have much time, you should explore these options to the fullest.
Walk Away Foreclosures Loan Service 760-881-4335
Walk Away Foreclosures is committed to helping families, lenders and servicers in facilitating and expediting the loan modification and loan workout process. We feel that this is crucial in assisting all parties avoid foreclosure and minimize unnecessary costs, fees and headaches.
Lenders and servicers are very busy with desperate homeowners trying to save their homes from foreclosure. Unfortunately, they do not have the man power or the capabilities to save everyone. Many people are simply getting lost in the system and suffering an unnecessary foreclosure when they could have worked it out with their lender.
However, when a lawyer is involved, it seems as if the calls start to get answered and the letters responded to. Often this can make the difference between saving your home and losing your home. With an attorney involved, you have an important ally in your corner to get you the mortgage help or the loan modification you need, FAST!
Walk Away Foreclosures safe loan modification service helps homeowners fix their loans & save their homes!
Please fill out the quick contact form 24 / 7 or call 760-881-4335 M-F 9am-7pm PST. You will be qualified for FREE and NO OBLIGATION for a loan modification by one of our mortgage investigators.