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How To Effectively Work With Your Loss Mitigator During Foreclosure

Mar 26, 2008
A Loss Mitigator is a person who assists individuals facing foreclosure. Every lending institution has what is known as a Loss Mitigation Department. The function of this department is to review mortgage notes to determine if they are creating a profit or loss for the lender.

Loss mitigators oftentimes work directly for a bank or lending institution. However, they may also act as a representative for the Lienholder, or as an independent agent who works strictly for the interests of the Borrower.

Homeowners facing foreclosure are generally assigned to a Loss Mitigator who will work directly with them in an effort to resolve their delinquent account. Depending on the circumstances that caused the individual to default on their mortgage note, Loss Mitigators may offer a loan modification or approve a short sale.

Prior to contacting your assigned Loss Mitigator, you will want to organize financial documents including pay stubs or other proof of income, a current tax return, list of expenses and a proposed repayment plan. It's also a good idea to create a timeline of events that caused you to fall behind on your mortgage note.

If you became delinquent because of chronic illness, disability or loss of employment, the Loss Mitigator will be more willing to assist you. If you became delinquent because you are horrible with finances and went on a spending spree, chances are good the Loss Mitigator won't have much sympathy and will not be extremely eager to assist you.

This is not to be misinterpreted as saying you should make up a sad story. Nothing could be further from the truth. If you can't handle your finances, it's best to own up to it from the start because you will be required to provide documentation showing how you spend your money. Don't blow your chance for saving your home from foreclosure by fabricating a lie.

The most common option presented to individuals facing foreclosure is known as Loan Modification. This type of arrangement allows Borrowers to make partial payments toward the delinquent amount and extend the terms of the loan.

For example, if a Borrower is three months delinquent on their mortgage note, the Loss Mitigator may allow the homeowner to pay one payment and roll the remaining two payments to the end of the note. In some instances, they might lower the monthly mortgage payment for a period of three to six months, or longer, depending on the circumstances.

If you are unable to meet the financial obligations of a loan modification, the Loss Mitigator can assist you with other options. These might include a Short Sale or Deed in Lieu of Foreclosure. Certain criteria must be met before a lender will agree to a Short Sale, including not having any equity in your home and owing more than the home is worth.

With a Deed in Lieu of Foreclosure, the borrower must return their home to the lender. In order to qualify for this type of transaction, you must exhaust all other options including attempting to sell your home. While this arrangement will not save your home from foreclosure, it is not nearly as damaging to your credit report.

Keep in mind a Loss Mitigator can be your best friend or your worst enemy. It is essential to be respectful and patient as you work through the process of trying to save your home from foreclosure or receive acceptance for a short sale. Take time to know your rights in the foreclosure process. Doing so may make it possible to use the Loss Mitigation process to get back on track with your mortgage.
About the Author
Simon Volkov is a private Real Estate Note Investor who provides solutions to individuals facing foreclosure, short sales and other financial hardships. If you need to sell your house fast or looking for alternatives to help you avoid foreclosure visit www.SimonVolkov.com today.
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