By Simon Volkov

A loss mitigator specializes in helping homeowners struggling to maintain their mortgage payments. Most mortgage lenders have a loss mitigation department to help borrowers devise a plan to get back on track. Mitigators review borrowers’ financial records to determine available options to prevent foreclosure.

A loss mitigator is usually employed by the bank. However, independent mitigators can be retained to work on behalf of the lender or borrower. When banks use in-house loss mitigators, there is no fee for the service. When lenders do not have a mitigation department, homeowners will need to retain the services of an independent agent.

Bank loss mitigators mediate between lenders and borrowers. In the case of short sales, mitigators will also work with potential buyers of the property.

When homeowners default on their mortgage loan, mitigators usually offer a loan modification. If borrowers are able to maintain future payments, banks can modify the loan to permanently alter the terms.

Loan modifications are somewhat flexible and can be altered to help borrowers cure mortgage arrears and remain current on future payments. Some lenders require borrowers to pay delinquent amounts in full before entering into a loan modification. Others require partial payment of past due amounts.

On rare occasions, mortgage lenders will temporarily suspend or reduce mortgage payments through a real estate forbearance agreement. These payments can be rolled to the end of the mortgage note; extending payment terms.

When homeowners do not qualify for loan modifications, loss mitigators might offer the option of a short sale. Short sales involve selling the property for less than borrowers owe on their home mortgage loan.

Borrowers must meet certain criteria before banks grant short sale approval. The primary requirements include owing more on the loan than the property is worth and not having any accrued home equity.

The process of short selling is complex and involves taking an audit of borrowers’ finances. Banks will not authorize a short sale until they are convinced the borrower does not possess any assets which could be used to repay the loan.

Every bank handles short sales differently, but requires the same type of information and financial documentation. Borrowers must submit a short sale hardship letter which outlines the events that caused them to fall behind with mortgage payments.

Oftentimes, loss mitigators base their decision to accept or deny short sale approval based on the letter of hardship. Others require borrowers to submit a short sale packet consisting of financial records along with their hardship letter.

Regardless of the short sale process used it is imperative to provide requested documents in a timely fashion. Loss mitigators are overwhelmed with caseloads and appreciate working with homeowners who are organized, prepared and meet deadlines.

If mortgage lenders do not offer the option to short sale or rejects borrowers request, the last option is foreclosure. It is important to obtain a deed in lieu of foreclosure whenever possible. A deed in lieu means the bank accepts the sale price as payment in full. Without a deed in lieu, banks can issue a deficiency judgment for the difference between the sale price and loan balance. Once a judgment is issued, it remains on credit reports until paid in full.

Although loss mitigators do not make final decisions, they can make or break deals. Always be respectful and polite while working through the foreclosure prevention process or obtaining short sale approval. Take time to develop a working relationship and provide requested documents in a timely fashion. Doing so can go a long way in achieving a successful outcome.

About the Author: Author of Short Sale Hardship Letter eBook Course, Simon Volkov presents a comprehensive foreclosure and short sale article library via his website. Topics range from working with your bank loss mitigator to foreclosure prevention strategies. Learn more at SimonVolkov.com.

Source: isnare.com

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