Countrywide Loss Mitigation - Find an Alternative to Foreclosure

Nowadays in the time of financial distress many people choose loss mitigation as the best way to solve their problems. Loss mitigation is the process of trying to stop a home foreclosure before it occurs. This process can be led by either an employee or representative of the lean holder. Sometimes loss mitigation is handled by a third party due to their experience and the ability to deal with the lending company without a personal attachment to the situation. As a rule the third party works strictly for the best interests of the home owner.

Loss mitigation program was established to help home owners that were facing the loss of their homes due to delinquent payments. Although it seems as though Loss Mitigation is a new concept, it has been used by mortgage lenders for many years.

A loss mitigation counselor will work with the home owner as well as the lender to find an alternative to foreclosure. First of all, a loss mitigation counselor will seek to set up a loan modification plan or a repayment plan that is realistic for the home owner as well as agreeable to the lending institution. Loan modification may include a partial payment of amounts in arrears and then an extension of the loan terms to compensate for the remainder of the amount of the loan in default.

The main aim of loss mitigation is keeping the home owners in their home. If it seems impossible to achieve this goal, then every attempt should be made to help the home owner get the most for their home as they possibly can before a foreclosure sale takes place. Sometimes this may include deed-in-lieu of foreclosure or a short payoff, if a qualified purchaser can be found.

By taking the time to know what your rights are in the foreclosure process, it is possible to use the loss mitigation process to get back on track with your mortgage. No doubt that lenders want to keep the home owner in their home. It is up to the home owner to show that they will be able to catch up or maintain the mortgage payment in the future.

Kinds of loss mitigation

• Short sale: This is a process whereby a lender accepts a payoff that is less than the principal balance of a homeowner's mortgage, in order to permit the homeowner to sell the home for the actual market value of the home. This specifically applies to homeowners that owe more on their mortgage than the property is worth. Without such a principal reduction the homeowner would not be able to sell the home.
• Loan modification: This is a process whereby a homeowner's mortgage is modified and both lender and homeowner are bound by the new terms. The most common modifications are lowering the interest rate, reducing the principal balance, 'fixing' adjustable interest rates, increasing the loan term, forgiveness of payment defaults & Fees, or any combination of these.
• Short refinance: This is a process whereby a lender reduces the principal balance of a homeowner's mortgage in order to permit the homeowner to refinance with a new lender. The reduction in principal is designed to meet the Loan-to-value guidelines of the new lender (which makes refinancing possible).
• Special Forbearance - This is where you will make no monthly payment or a reduced monthly payment. Sometimes, the lender will ask you to be put on a repayment plan when the forbearance has been finished to pay back what you missed, while other times they just modify your loan.
• Deed in lieu: A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.
• Cash-for-keys negotiation: This is a variation of the deed in lieu of foreclosure. The difference is that the lender will actually pay the homeowner to vacate the home in a timely fashion without destroying the property. The lender does this to avoid incurring the additional expenses involved in evicting such homeowners.

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