Stop Foreclosure - The Loss Mitigation Alternative

By Tomasheus Privetsky

If you find yourself facing foreclosure, there are probably several contributing factors, which have led to your situation. You might have lost your job, suffered an illness (and its accompanying medical bills) or been through a divorce. However you get here, one thing is certain; the bills are piling up and it is getting harder and harder to make ends meet. Even worse is the situation of having an adjustable rate mortgage whose interest rate has skyrocketed, making your payments much larger.

While you're trying to think of how to stop foreclosure on your home, you're getting near constant calls, letters and knocks on your door from foreclosure investors.

These foreclosure investors specialize in chasing homeowners just like you who are close to losing their homes. They're interested in buying your home and profiting from it, because they believe you must sell the home.

Should you sell to an investor to avoid being foreclosed on? Maybe, but certainly not as your first option. And only after you exhausted other foreclosure prevention means such as rearranging your loan.

Rearrange Your Loan To Stop Foreclosure

Once you missed a few payments, your credit report will reflect them, and your credit score will drop dramatically. This low credit score will likely prevent you from being able to get a new loan to refinance your current loan in default.

Every mortgage lender in the country has a Loss Mitigation department established with the sole purpose of reducing lender's losses on loans. They work to put homeowners who fell behind on payments on a repayment plan to bring your loan out of default. The best thing about Loss Mitigation alternative is, unlike a new loan, it doesn't require a credit approval.

If You Do Work Out a Repayment Plan, Beware of the Challenges

One of the biggest problems with these loss mitigation departments is they don't employ enough people to handle unusually high rates of foreclosure the country is experiencing right now. In fact, these plans are often difficult to arrange due to the heavy workload, which these employees are faced with. Since loss mitigation departments have so little time available to work with each file, they will tend to offer repayment plans which don't give you enough time to catch up with your payments, and monthly payments which are larger than you can realistically afford.

With the difficult situation you are in, you may be tempted to take this repayment plan offered to stop foreclosure; however, this is generally just a short-term solution. Since the terms of the repayment plan are not a realistic fit for your budget, you will as likely or not be facing foreclosure again in a matter of months.

Watch Out When Hiring Workout Professionals To Stop Foreclosure

One of the easiest ways to get out of foreclosure by using the loss mitigation process is by getting a professional in the field to negotiate with the mortgage lender for you. There are companies who have extensive experience in this area and have negotiated thousands of repayment cases successfully for homeowners whose mortgages are in default. Some of these companies have strong working relationships with the loss mitigation departments of mortgage lenders all over the country.

These companies will look over your finances and help you come up with a repayment schedule, which is possible for you to meet; payments will be kept as low as possible to make it easier for you to make your payments. These companies have intimate knowledge of the programs offered by different lenders and can negotiate a better deal for you than you would be offered by the lender on your own. They may even be able to negotiate a lower interest rate on your mortgage, which will lower your payments.

Given your financial difficulties, you may think that hiring a professional service like this will be beyond your means. Thankfully, this is not the case. Most of these companies charge a flat fee, usually equivalent to a monthly mortgage payment. Since they can often negotiate a deferral on your next mortgage payment, their services often pay for themselves.

You May Consider Cutting Your Losses

If stopping foreclosure through loss mitigation isn't in your plans, then it's time to sell your home so you don't have a foreclosure record on your credit. If you have a lot of time before the foreclosure sale, then list your home for sale with a real estate agent. This way you will get more for your property. If you're out of time, now you may have to turn to investment companies that can buy quickly. Just make sure you're dealing with a company that has means and track record to perform and close the purchase fast.

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As you can tell, there's more than one alternative to avoid foreclosure of your home. Visit our website to get a referral to a loss mitigation company that can help you avoid foreclosure.