Loss Mitigation
(Options for Saving Your Home)

What is Loss Mitigation?

  • Loss mitigation is the term used by mortgage companies to describe their programs and department that can assist borrowers in bringing their mortgages current.
  • The number one requirement of Loss Mitigation is affordability of the mortgage.  To be able to assist you, the mortgage company must see a budget that demonstrates to them that the income coming into your home is sufficient to support all of the household bills.
  • When speaking to your mortgage company, ask to speak to their Loss Mitigation Department, which is sometimes called the Loan Counseling Department.  These are the people that have the authority and knowledge to assist you with becoming current on your mortgage.
  • Other requirements:
    1. Find out what type of loan you have (i.e. Freddie Mac, Fannie Mae, VA, or FHA).  When you contact your mortgage company, ask them who the investor is on your loan, or if you have mortgage insurance.
    2. You must contact your mortgage company and request a Loss Mitigation Package for your loan.

Loss Mitigation Options that You May Have:

  • Repayment Plan:
    This is when the mortgage company can take the amount that you are delinquent and add it on to your regular payment, and spread it out over 3-12 months.  (Some mortgage companies will allow longer.)
  • Loan Modification:
    This is when the mortgage company adds the amount that you are delinquent to the principal balance of your loan.  If they think that it is necessary, then they may consider extending your loan term to 30 years and/or adjust your interest rate. 
  • Partial Claim:
    (This strategy is used on FHA loans or those with PMI insurance only.)  This is when the insurer of your mortgage gives you a loan for the amount that you are delinquent.  This is a non-interest loan that does not require payment until the sale of the home or until you pay off the first mortgage.