Bank Loss Mitigation is a special branch of banks and lending institutions which help people stop foreclosure. Individuals who work in this division are known as Loss Mitigators. It is their job to work with borrowers and help them resolve financial issues in order to save their home. In cases where this is impossible, bank loss mitigators may offer borrower’s an option known as a short sale.
Prior to contacting the loss mitigation department homeowners should organize all of their paperwork and develop a repayment plan. If they are financially unable to get back on track, they may have the option of asking the lender for a Deed in Lieu of Foreclosure.
If the homeowner has the financial means to remain in their home, the Loss Mitigator may offer a Loan Modification or Forbearance Agreement. These repayment plans typically reduce the monthly payment amount or reorganize the loan by adding additional payments to the end of the loan. In other words, if the homeowner is three months behind in their mortgage payments, the lender may allow the borrower to pay one payment and roll the remaining two payments to the end of the loan.
For individuals who are unable to workout a mortgage repayment plan, a Short Sale might be accepted by the lender. A short sale involves getting the bank to accept a lesser amount than is due on the mortgage note.
Currently, most lenders are only accepting one out of ten short sale requests. The reason for such a low acceptance rate is the fact that many people do not submit all of the required documentation. People who decide to request a short sale are advised to work with a professional who has working knowledge of this type of real estate transaction.
Keep in mind it is the job of the Loss Mitigator to keep losses to a minimum. Most lenders will not accept less than ninety-five cents on the dollar. For instance, if you owe $100,000 on your home and request a short sale from the lender, chances are the least amount the bank will accept is $95,000.
Due to the sheer magnitude of foreclosure properties, experts suggest loss mitigation departments will soon be forced into accepting sixty-five to seventy cents on the dollar. However, if you are currently facing foreclosure and want your lender to accept a short sale, you will need to locate a buyer who is willing to offer at least 95-percent of what is owed on the loan.
When working with the bank’s Loss Mitigation Department, keep in mind the Loss Mitigator can make or break your deal. For best results always be polite and professional, have your information organized and readily available, and follow the advice they provide you.
Once the Loss Mitigation Department approves your repayment plan, do everything in your power to stay current on your payments. Otherwise, you will find yourself back where you started and your lender will probably not grant you a second chance.
