Loss Mitigation -- Saving the Real Estate Market

Times are tough right now and every home saved from foreclosure makes a huge positive impact on the families, friends, communities, and our whole economy.

What Is Loss Mitigation?
Loss Mitigation is the process of negotiating or finding a solution before the lender takes the home back. As foreclosure rates rise, lenders are becoming more creative and willing to work out options with their borrowers. Mortgage companies sell loans—not real estate... Lenders do not want the house! 

Options for staying in the home:

Reinstatement: Pay the full amount owed in a lump sum by a specific date.

Forbearance: Temporarily reduce or suspend payments. 
A forbearance is often combined with a reinstatement.

Loan Modification: Permanent change in one or more of the terms of a loan resulting in a payment the mortgagor can afford. Some involve changing the interest rate from adjustable to fixed, or extending the number of years to repay the loan.

Partial Claim / Partial Release: Owners may qualify if their mortgage is insured, for a new low interest or interest-free loan to bring their loan current through the insurer (usually FHA). 

Options for moving out of the home:

Pre-Foreclosure Sale or Short Sale: Selling the house to prevent foreclosure. If more is owed on the home than it’s worth, lenders may agree to accept less than what is owed on the mortgage when sold. The lender must approve the sale.

Deed-in-lieu: Lender agrees to forgive the debt if owners sign over (via deed) the property to the lender. When there is a second mortgage or judgment on the property/owner, a deed-in- lieu may not be an option.

Real Estate agents are here to help! 



http://makinghomeaffordable.gov/
http://www.mnhousing.gov/