The goal of loss mitigation is to work out a mortgage loan modification solution that benefits both lender and borrower. Neither party wins when a homeowner struggles to pay their loan, so lenders have great incentive to work toward a solution. While you can represent yourself during the process, it is probably best to use a third party. The experience and understanding of the process a professional company has will prove invaluable in reaching the right solution. Neutrality in the situation puts loss mitigation specialists in a better negotiating position with the lender.

Nobody wins when a homeowner can’t pay his or her loan. The federal government and lending institutions know this and established loss mitigation as a means of working out a desirable solution for all parties involved.

Here are some  places to read more about loss mitigation options:

• Loan Modification – Permanent change to your loan details resulting in a new contract
• Short Sale – Negotiated sale of your home at a price below what you owe
• Foreclosure – Overview of foreclosure and you can do about it

The main goal is to establish a way for you to keep your home through loan modification. If keeping the home doesn’t prove viable in your situation, additional options provide an opportunity for you to get the most out of the situation with a better result than what foreclosure can offer.

Loss mitigation is a time-sensitive option and it’s important you take action today. The more time you have on your side, the better chance you have of securing a positive outcome. Of course, even if you don’t have much time, you should explore these options to the fullest.

Here are two options for finding short sale help:

• Professional Loss Mitigation Specialists. You may contact a loss mitigation office and hire legal professionals to take care of the short sale procedure. Make sure that the loss mitigation company has a good reputation and is already established in this kind of business. Again, you want experience in these situations. A good loss mitigation firm can also recommend a short sale real estate agent that has familiarity with this type of transaction.
• Real Estate Agent. Realtors are a great resource and you’ll definitely need one to sell your home. But you don’t want just any realtor working your short sale. This has to be someone with verified experience selling homes that require bank approval of a sale price that is less than what is owed on the mortgage. A good agent will probably have a person or business that is adept at handling the lender negotiation aspect of the sale. Short sales are difficult to do and time consuming for just one agent.

Whatever you do, don’t attempt to do a short sale without help. Typical real estate transactions are already tough enough. Throw in the extra hassle of a short sale and it’s an extremely difficult process.

Even with help, you’ll need to prepare for a long drawn-out process involving back and forth negotiations with the lender. Just because you have a buyer at an agreed upon price does not mean the sale will go through. The bank must approve all short sale deals. Enlisting the help of an experienced firm, agent or both will help smooth out that process.

There are many real estate agents, lawyers and loss mitigation experts who extend help with foreclosure prevention to homeowners and help the borrower qualify for a loss mitigation program.

One example is a short sale. The are many benefits to doing a short sale as foreclosure has proven to be far more harmful to your long-term outlook financially and even in other areas such as employment.

Refinancing your mortgage is another of those ways to prevent foreclosure. Many people who are in danger of foreclosure might not be ideal candidates for a refinance, but it’s absolutely something to look into as an alternative.

The other option – and most popular – is a loan modification which allows the homeowner to have the terms of the mortgage changed in order to accommodate a shift in their financial situation. The payments can be arranged to make the home loan more affordable.

Other foreclosure prevention options exist as well, but these are probably the best choices to start with. If none of the above works, you can start to look at the possibility of bankruptcy or a deed-in-lieu of foreclosure.

The point is mainly to say that as a homeowner, you should not sit back and allow your home to be taken away because you are afraid or unsure about what to do. Experts in foreclosure prevention are out there and can help, but you have to take the initiative to get going.

Qualifying for one of these programs comes down to your specific situation and what solution makes the most sense.

Possible Foreclosure Programs

• Loan Modification. The first thing anyone ever looks to when trying to avoid foreclosure is loan modification. The ideas is to modify your loan to something more affordable and get back to making on-time mortgage payments.
• Short Sale. Not everyone can get a modification. Short sales are usually the next best thing. It involves you selling your home, but for less than what is owed on the loan. The bank has to sign off on it.
• Forbearance. For people with temporary problems, forbearance offers a solution that gives you temporary relief while your situation that got you in trouble is being resolved.
• Deed-in-lieu of Foreclosure. While the bank does take back your house from you, you are absolved of the money you owed and avoid a public foreclosure process that can be embarrassing to some.
• Cash For Keys. This program actually does not avoid foreclosure, but rather is an cash incentive for you to walk away peacefully once the foreclosure process is complete.

There are other programs not mentioned here. Typically, most people start with loan modification and most that avoid foreclosure will probably do that or a short sale.

Qualifying for one of these programs comes down to your individual situation so consult with a loss mitigation specialist to find out what is best for you.

Mortgage servicing companies have often been criticized for trying to do too little for their customers. It shows in some of the results they grant in loan modification cases. The problem is that as an individual homeowner, you don’t necessarily know that what they present to you could be better.

You also feel like you don’t have any power to negotiate and in a lot of cases, you don’t.

Take for example, the following quote in a recent article on San Diego’s 10news.com.

“You’re willing to take whatever they offer you because you don’t feel like you can haggle with them,” she said.

A third party company is doing this day in and day out. This makes it much easier to decipher good modification offerings from the bad. If a negotiator gets a result they think can be better, they’re going to do everything they can to get it. Your legal representation won’t back down until they’re satisfied that your lender is doing everything they can to make your situation better.

Of course, you are welcome to try this on your own. Just have a backup plan and consider securing representation.

If you feel like you’ve taken it as far as possible and can’t do anything more, we have applications on this site that allows you to get started with a loss mitigation firm.

Of course, the answer is that there is no sure-fire answer.

Loan modifications rely on the responsiveness and policies of the lender, effectiveness of the mitigation company and commitment of the homeowner. In other words, there are some large, moving parts that sometimes come together for a quick solution (less than 60 days), but usually take much longer (sometimes up to an entire year!).

Let’s look at the issues that effect how long the modification takes.

Effectiveness of the Mitigation Company

Because the lenders are strict and have rigorous requirements, en effective mitigation company is important to moving the process quickly.

In the beginning, there is a lot of prep work that includes compiling financial information and other pertinent information to your case. An effective company will have a proven process and stays on top of you to make sure you are providing the necessary information.

Once the file is at the lender, an effective mitigation company will stay on top of your file making sure the inevitable requests for updated documentation are relayed to you and processed quickly. Valuable time is often lost when a company or individual does not stay on top of an ongoing file.

Mitigation Prep Time: 7-10 days compiling information from date of contract with the cooperation of the homeowner. An additional 7-10 days is spent getting the file uploaded to the lender and in their system.

Responsiveness and Policies of the Lender

This is by far the most variable and important issue to the modification duration.

Some lenders are committed to the modification process and are organized in such a way that they can move quickly. GMAC comes to mind as one lender that we have recently seen quick results with. However, it’s more common to see lenders taking their time and dragging out the process.

If you’re doing this on your own, expect to get the run-around. Lenders are often looking for reasons to deny a loan modification. You probably won’t find them too responsive to your requests for immediacy. In many cases, they are understaffed, but often, it’s policy that dictates a long, drawn out process.

Time at the lender: Roughly 4 months, but highly variable. Some cases may take 6 months or even a year depending on the complexity and commitment of all interested parties.

Commitment of the Homeowner

Your commitment is vital to the process. A third party specialist may have an established way of doing things and can move quickly, but without your cooperation, it does not work. If a homeowner does not comply with documentation update requests, it kills the process and can result in setbacks in the case. Always respond quickly to any requests whether they be from a company you hire or the lender itself.

Are you doing anything to secure the future of your home?

Obviously, no one wants to be apart of the six million homeowners that may face foreclosure, but are you doing anything about it? The government has set up the Home Affordable Modification Program to help, but only 12% of homeowners eligible for the government’s loan modification assistance program have actually had their mortgages reworked.

This means there is a lot of government money on the table right now dedicated to modifying loans that hasn’t been used. Millions of people can still qualify for lower monthly payments.

The simple truth, though, is most homeowners need help to get a modification. So many people unsuccessfully try it on their own and then end up contacting a company for help. The lenders can make the process overly confusing and it becomes very easy to make critical mistakes that ultimately get you declined.

When you are in the middle of a crisis where you are in the process or under the threat of losing your home the first thing you look for is help. When I personally experienced this threat I was able to turn to {company name withheld} to provide me with understanding and relieve to provide the strength to cope with the financial challenges I faced.

My home mortgage was adjustable and the date for readjustment was just a few short months away. I had made over 50 calls to my mortgage company and received so many different answers of what to do and no results that I knew it was time to call in professionals that could save my home for foreclosure.

The very first person I talked to from {company name withheld} was knowledgeable, understanding, compent and helpful. He put me touch with a personal home finance consultant that was able to answer all of my questions and provide me with the peace of mind that only comes from knowing that you have help to face the challenges and bureaucracy that you are forced to deal with when working to save your home financially. My loss mitigation manager held my hand through the entire process. She always a email and or a phone call away. She was understanding, supportive, prompt and knowledgable, without her I could not have stayed sane through this ordeal. I can not say enough about the dedication and support she offered me throughout this entire crisis.

Without the assistance of {company name withheld}. I might have lost my home. Calling {company name withheld} provided me with the peace of mind, the support and the professional help that I needed to save my home and provide me with a fixed rate mortgage that I can afford for 30 years.

Sincerely,

Rescued Home Owner

1. Each lender has different policies and approaches

Some lenders will work with you, some won’t. The process with one lender can be very different from the next. Perhaps you think you understand everything you need to do, only to find out that your specific lender has different guidelines. What happens when you take the wrong actions? It could cost you your chance at successfully negotiating new loan terms.

2. Lenders are not going to make this easy

A lender is already leery of your ability to pay your mortgage because you have missed payments. They are going to be detail-oriented when considering your application for a loan modification and will want hard proof that you will be able to handle the new terms. In other words, you’ll need to dot each ‘i’ and cross every ‘t’.  Can you say that in conducting your own negotiations that you are confident you have done everything the lender requires?

3. The negotiation takes some expertise

Say you were having car troubles and couldn’t get your vehicle to start. Would you dive in to the engine yourself and fix the problem? Probably not – more likely, you’d take it to a mechanic who is trained to fix such problems. We all have our niches of expertise and loan modification is no different. There are subtle tricks and issues that can have a huge effect on your loss mitigation success. A negotiator that has been working with lenders for years isn’t going to get tripped up by during the process. Rather, they will be able to smoothly maneuver through the process and avoid critical mistakes that could cost you dearly.

4. Time is critical and none of us have enough to spare

In case you somehow missed it, there are only 24 hours in each day. Between work, family, social responsibilities and everything else life throws at us, do you have the time required to accomplish a mortgage loan modification? Probably not. There’s no getting around it, you will have to spend some time figuring out your financial picture and discussing your situation with your negotiation specialist. But that’s it, really. The rest can be left to the professional you hire who will be charged with staying on top of the process until a solution is reached. This leaves you free to deal with the other aspects of your life while someone makes sure your home stay, well, yours.

One of the questions we frequently get asked is “How long will it take for me to get my loan modified?” While there is no one answer that is universally true, there is a general timeline that can be followed. Let’s look at the process step-by-step.

1. Securing help. The first thing you need to do is entirely in your own hands. You need to pick up the phone or submit an application online and get someone working on your behalf. There’s no time constraint on this other than you taking a moment to initiate the process.

Time it Takes: Immediately, but it’s up to you

2. Getting a full loan modification package submitted. We have a set of forms you can access once you speak with an AMLG loss mitigation specialist. These must be filled out and returned to us in a timely manner. We’ll help you anywhere you need it, but it’s largely up to you to make sure this gets done quickly. The most frustrating aspect of loss mitigation for us is when a borrower that we know we can help drags his or her feet on getting the information to us. Time is not on anyone’s side and any delays can end up costing you a successful loan modification.

Time it Takes: 1- 2 days if you are proactive about getting everything done quickly.

3. Internal auditing and underwriting of the file. Once your complete package is in, we will do an internal review to make sure everything is in and documented. We will not submit your package unless our mitigators are confident we have built a solid case.

Time it Takes: 24 hours

4. Submit file to be assigned to a mitigation specialist with your lender. Following our internal review, the package is submitted to your lender for assignment with one of their loss mitigation specialists. Depending on the lender, this can take up to a couple weeks so be prepared to for a waiting period.

Time it Takes: 3-14 days depending on the lender

5. Mitigation process and getting a decision back. This is widely variable. Depending on your lender, you may receive a decision within less than a month or it could take up to 60 days. The lenders that are properly staffed will deal with your loan modification request in a timely manner, while those that can’t handle the volume of requests will take longer.

Note: One of the biggest mistakes people make is trying to deal directly with their lender. We hear stories from people about trying for 3-4 months to get a decision and nothing ever happens. It doesn’t need to take that long and if it does, you need representation. Many lenders treat us differently than they do a borrower. The reason is that they know we are going to give them exactly what is needed and they can trust us to only bring clients that are solid candidates for a loan modification. A lender knows up front when they deal with us that they will spend less time working the account.

Time it Takes: Typically 30 – 60 days, but it depends on the lender and can take longer or shorter than the typical time.

6. Making the newly modified loan official. Once the decision is returned from the lender, you’ll have a clear set of new terms that you can either choose to accept or decline. Typically, the lender will give you your new rate, balance, monthly payment and date that the loan will be completed. Additionally, they give you a date you must sign and return the agreement by. If you fail to return the agreement on time, it may cancel your right to a loan modification so do not delay.

Time it Takes: 1-7 days depending on how quickly you return your signed agreement.