Loan Modification

If you are looking for a loan modification, there are a lot of terms you should learn, including loss mitigation. We take the definition from Wikipedia, to help you learn these financial terms so that you are not taken advantage of when dealing with financial professionals.

Loss mitigation [1]is used to describe a third party helping a homeowner, a division within a bank that mitigates the loss of the bank, or a firm that handles the process of negotiation between a homeowner and the homeowner’s lender. Loss mitigation works to negotiate mortgage terms for the homeowner that will prevent foreclosure. These new terms are typically obtained through loan modification, short sale negotiation, short refinance negotiation, deed in lieu of foreclosure, cash-for-keys negotiation, or a partial claim loan or other loan work-out. All of the options serve the same purpose, to stabilize the risk of loss the lender (investor) is in danger of realizing. The different options are available to homeowners to try getting the homeowner to “perform” (pay timely) and cure the potential loss the lender/investor projects incurring through the foreclosure process[citation needed] and auction sale of the property.

Loss mitigation and its short sale services are one of the ways for a homeowner to have their homes foreclosed in a quick sale, to remedy a partial remedy of any owed payments, and hopefully avoid bankruptcy and the huge impact on credit scores.

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