Loss Mitigation Assistance
The term "loss mitigation" refers to a loan servicer's duty to mitigate or lessen the loss to the investor (the loan owner) resulting from a borrower's default. Given the costs that an investor must bear through the foreclosure process, loss mitigation is intended to be beneficial for the investor.
Loss mitigation is also supposed to benefit the borrower. Some loss mitigation options, such as a loan modification, forbearance agreement, and repayment plan, allow the borrower to stay in the home. Other options, like a short sale or deed in lieu of foreclosure, help a borrower give up the property without going through foreclosure.
1) Assess Your Situation
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Understanding the severity of your situation can help you get ahead of it
2) Reach Out For Help
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If you’re struggling to make your mortgage payment, there are many resources for assistance and the sooner you reach out the better.
3) Options to Stay In Your Home
Whether you’re facing short- or long-term financial setback, there are workout options that may help you keep your home and avoid foreclosure.
4) Options to Leave Your Home
If homeownership is no longer affordable or desirable, there are options to exit your home gracefully — without the financial and emotional impacts of a foreclosure.
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Gather your financial information—It’s a good idea to have your basic financial and loan information on hand when you call your mortgage servicer. You’ll need:
- Your mortgage statements, including information on a second mortgage (if applicable);
- Your other monthly debt payments (e.g., car or student loans, credit card payments); and
- Your income details (paystubs and income tax returns).
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Know your current situation—Be ready to outline your current income and employment status, explain why you are having trouble catching up on your mortgage payments, and discuss whether your situation is short-term or long-term. Your mortgage servicer will need to understand the reasons you are having difficulty in order to find the right solution for you.
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Contact your mortgage company or the Fannie Mae Mortgage Help Network—To get more information about your options, including whether you may qualify.
Servicers Have to Help Delinquent Borrowers With Loss Mitigation
Under federal mortgage servicing laws, in most cases, by the time a mortgage payment is 45 days' delinquent, the servicer must appoint personnel to help the borrower with loss mitigation.
Servicers also have to inform borrowers about available loss mitigation options in writing and over the phone, if possible and appropriate.
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Specifically, the servicer must assign a single person or a team that's accessible to the borrower by phone, who can respond to inquiries and work with the borrower through the loss mitigation process. The appointed personnel must be able to advise the borrower about:
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available loss mitigation programs
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how to submit a complete loss mitigation application
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the status of a submitted loss mitigation application
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how to make an appeal (if the application is denied), and
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the circumstances when the servicer may refer the account to foreclosure.
With some loss mitigation options, like a short-term repayment plan, your servicer might be able to evaluate you over the phone and provide an immediate approval. For a more long-term solution, like a loan modification, you'll need to fill out and submit a loss mitigation application to the servicer.
Submitting a Complete Loss Mitigation Package Can Delay Foreclosure
Under federal law, if you send the servicer a complete loss mitigation package before a foreclosure starts or more than 37 days before a foreclosure sale, the servicer can't begin a foreclosure or move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until:
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it informs you that you're not eligible for any loss mitigation option (and any appeal has been exhausted)
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you reject all loss mitigation offers, or
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you fail to comply with the terms of a loss mitigation option, like a trial modification.
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Be aware that, under federal law, the servicer generally doesn't have to review multiple applications from you. But if you bring the loan current after submitting an application, you may send another.
Additional Resources
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• For a list of HUD-approved housing counseling agencies that can provide free foreclosure prevention and debt management information, and may be able to provide translation or other language assistance, contact one of the following federal government agencies:
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o The U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or www.hud.gov/counseling
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o The Consumer Financial Protection Bureau (CFPB) at (855) 411-2372 or www.consumerfinance.gov/mortgagehelp
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• For additional information on how to avoid foreclosure, including help for military servicemembers, you may also visit Freddie Mac’s My Home web site at http://myhome.freddiemac.com].
https://www.consumerfinance.gov/mortgagehelp
For additional information on how to avoid foreclosure, including help for military servicemembers, you may also visit Fannie Mae’s www.knowyouroptions.com.