Loss Mitigation / An alternative to foreclosure
Team Results has Loss Mitigation Consultants, under contract with many major lenders. LMCs may make contact with you at the request of the lender, and gather information necessary to determine the status of the property, borrower's financial stability, and make decisions as to the best course of action.
What is Loss Mitigation? When a borrower falls behind on his mortgage payments, either paying late or missing payments, an alarm bell sounds at the company’s Loss-Mitigation department. The loan servicer has to figure out if the borrower can afford to make payments, and bring the loan current. If the borrower can’t or won’t, the company will start a foreclosure process, which is costly, time consuming, and embarrassing for all involved.
Believe it or not; most lenders don’t want to foreclose unless there is no other alternative. The alternative is what loss mitigation departments try to find. They collect financial information from the borrower, market value data on the property, and market conditions in the local area, and determine if an alternative to foreclosure is possible.
Alternatives to Foreclosure
Reinstate: Bringing all payments current, arranging a repayment plan, etc.
Mortgage Modification: The lender may adjust the terms of the mortgage in order to make the payment more affordable, or perhaps extend the loan and defer past due payments.
Relocation: If you don’t have the ability to reinstate your loan, the servicer might allow time to sell the home without going through foreclosure.
Short-Sale: If you owe more than the market value of the home, and need to sell, the servicer will require specific information before approving a short sale, whereby, the lender agrees to take a lesser amount in order to satisfy the mortgage.
Deed-In-Lieu: It is possible that none of these is a satisfactory solution. In that case the lender may take ownership of the property (called REO) and try to dispose of it themselves. This involves the borrower, voluntarily giving back the deed in order to avoid the formal foreclosure process.
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