What does loss mitigation mean?
Loss mitigation generally refers to the department of a bank, which handles severely delinquent mortgage loans. Loss mitigation works to negotiate terms with a borrower to prevent foreclosure. Loss mitigation is generally tasked with negotiating short sales.
The loss mitigation department is comprised of professional negotiators or loss litigators whose job is to minimize the bank’s loss on the mortgage note. Loss litigators will discuss options to prevent foreclosure such as loan modifications, work out, cash for keys, or short refinance negotiation.
If a homeowner is unable to keep their home, loss litigators will explore a deed in lieu of foreclosure or short sale options with the borrower. The loss litigators review each homeowner’s case evaluating different scenarios of what it might cost the bank to foreclose versus agreeing to a short sale.
Types of loss mitigation include:
- Mortgage modification
- Short sale
- Short refinance
- Cash for keys
- Special forbearance
- Deed in lieu of foreclosure
The greatest benefit to the homeowner is to provide a financially sustainable solution that the homeowner can afford. Lenders benefit by minimizing their loss on the mortgage note and avoid the high legal costs of foreclosing.
If you have any further questions about foreclosure, please contact us.