Quick Answer: What does loss mitigation mean in real estate?

Loss mitigation is the process of trying to protect homeowners and mortgage owners from foreclosure. It might refer to any one of several strategies that could be employed to get and keep homeowners current on their mortgage payments and in their homes.

What does it mean if your home is in loss mitigation?

Loss mitigation refers to a servicer’s responsibility to reduce or “mitigate” the loss to the investor that can come from a foreclosure. … Loss mitigation options may include deed-in-lieu of foreclosure, forbearance, repayment plan, short sale, or a loan modification.

Can I sell my house if its in loss mitigation?

The answer is yes; you can sell your house while in forbearance. However, the forborne amount must be paid back upon sale of the home. This amount will likely come out of the purchase price of the home. You must also pay off the owed balance remaining on the mortgage; this too comes out of your profit.

Is loss mitigation a good idea?

Loss mitigation can be a great option for those who want to avoid foreclosure, but it won’t always be a viable solution for every person. The goal of loss mitigation is to get the borrower paying again or recoup the money owed to the lender through the sale of the home.

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What happens after loss mitigation?

(1) The loss mitigation option permits the borrower to delay paying covered amounts until the mortgage loan is refinanced, the mortgaged property is sold, the term of the mortgage loan ends, or, for a mortgage loan insured by the Federal Housing Administration, the mortgage insurance terminates.

Is loss mitigation the same as forbearance?

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.

Is loss mitigation the same as loan modification?

If you’re struggling to pay your mortgage, you might be able to lower your payments with a loan modification. “Loss mitigation” is the process in the mortgage-servicing business where borrowers and their servicer, on behalf of the loan owner or “investor,” work together to prevent a foreclosure.