Homeowners
What is Loss Mitigation?
Loss Mitigation is the process of borrowers and mortgage servicers working together to create a plan to avoid foreclosure. This can be done in several different ways, including through Forbearance, Repayment Plans, Loan Modification, Short Sale and Deed-In-Lieu of Foreclosure.
What is Forbearance?
Sometimes, homeowners experience temporary financial hardships. If this has happened to you, then you are not alone. One of the tools developed to address temporary financial hardships is Forbearance. A Forbearance is when the homeowner and lender come to terms on allowing the homeowner to make reduced payments during temporary hardship. The loan will continue to accrue interest, and the difference between your normal mortgage payment and the reduced amount may be payable at the end of your Forbearance plan, but this tool can prevent Foreclosure.
What is a Repayment Plan?
Another tool to help with financial hardship is the Repayment Plan. For example, let’s say you missed a few mortgage payments due to financial hardship. Then the hardship is over and you’re back to where you were before. On future payments, Repayment Plans allow you to pay an amount higher than the amount of your normal mortgage payment. This will allow you to ‘catch up’. Repayment Plans are typically from 2 – 6 months but can be longer. Again, the goal is to prevent Foreclosure and Repayment Plans can help.
What is Loan Modification?
A Loan Modification is another way to help lower your mortgage payments, so you can deal with the financial hardship at hand. With Loan Modification your loan is ‘modified’ in terms of interest rate change, escrow and other expenses that will be added to the principal of your loan. This adjustments may extend the term or your loan but they can help you avoid Foreclosure.
In most cases, there is usually a trial period, which will show your ability to adjust to the new monthly payment.
What is a Short Sale?
A Short Sale is a transaction where a lender (mortgage company, bank, etc,), or more than one lender, agree to accept an amount which is less than the mortgage amount owed by the current homeowner.
As you can imagine, convincing a lender to accept less than what they are owed involves a substantial amount of negotiations. Having someone representing your interests, with years of experience, and who speaks the same language as lenders, is essential.
If you are facing a financial hardship, you are experiencing one of the most stressful periods a family or individual can endure. AOI has eliminated this stress for hundreds of clients. Contact us today and we will do the same for you.