Tuesday, January 13, 2009

Mortgage Loss Mitigation

(Source: Joe Gufford)

One of the by-products of the current state of the economy is the large amount of real estate foreclosure. They're at an all-time high, and many more are expected in the near future.

What this means is that lenders/investors are getting a very low return on their investments. They're in the business of lending money to buy homes, not to own them and sell them at substantial loss. Logically, these investors are willing to keep the cash flowing in, albeit at a rate less than they agreed. They are mitigating losses they're incurring with bad mortgages. Mortgage loss mitigation may include one of several solutions, from loan modification to foreclosure, special forbearance to repayment plans and others.

In response to the large pool of potential customers, hundreds of companies are popping up claiming to provide relief to homeowners facing foreclosure. Many of these companies are advertising they provide loan modifications. Period. Beware of such statements, as no one can guarantee they will provide or negotiate a loan modification. Each situation is different and many will not be agreeable to the lender. Research any loss mitigation provider, and be very wary of those who promise loan modification and only loan modification. Because of its popularity, a lot of unqualified individuals are claiming to be foreclosure experts and offer loan modification to earn some money. Be careful who you decide to work with, although the good ones are very helpful, the bad ones definitely are not!

There are firms with foreclosure consultants and specialists who are licensed and certified by U.S. HUD to bypass the servicer and work directly with the lender/investor on the borrower's behalf to negotiate the best workout plan.

For those interested in exploring Mortgage Loss Mitigation, be prepared to provide income and expense information and be ready to budget. The lender will need to know an accurate financial picture in order to be willing to negotiate a workout plan for a mortgage.

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