The Lenders Options

There are many loss mitigations options available to borrowers (and lenders) in, or approaching foreclosure situations.

Common Mortgage loan Modifications are:

Decreasing the Mortgage Interest Rate:

This can lower your monthly payments. It can be temporary or permanent.

Forgiving Part of the Loan:

The lender agrees to lower the total amount you owe on the loan, which reduces your monthly payments.

Deferring Part of the Loan Amount:

The lender defers part of the principle for a period of time, and calculates your mortgage payments based on the remaining principle. This temporarily lowers your monthly payment.

Extend the Loan:

This gives you more time to pay off the loan. For example, if you have a 30years loan, your lender may extend it to a 40 year loan, thus lowering your monthly payments.

 Loan modifications are just one of the more popular alternatives.

Loss Mitigation options include:

Re-instatement or Repayment Plan

If you are able to resume making your monthly payments, after falling behind on your mortgage payments then this might be a good option for you. Under this arrangement, the lender increases the regular monthly payment until the delinquency is repaid. Alternatively, the lender may opt to allow the borrower to resume regular mortgage payments without penalty and collect the delinquent payments at the end of the mortgage term.

Forbearance Agreement

This is often used when the borrower temporarily has an income reduction or expense increase. It is based on the borrower’s financial situation and may include a temporary reduction or suspension of payments for a specific length of time.

Pre-Foreclosure or Short Sale

The lender agrees to accept the proceeds from a pre-foreclosure sale in satisfaction of the loan even though the proceeds may be less than the amount owed on the mortgage. In Florida, only licensed real estate agents can represent buyers or sellers in a short sale.

Deed-In-Lieu of Foreclosure

This is typically used when the borrower’s attempt to sell their property prior to foreclosure fail. The borrower voluntarily deeds the property to the lender in order to avoid lengthily foreclosure, additional accrued interest, and expenses.