Financial hardships can cause a person to miss out on multiple instalments and default on his mortgage. He or she may face foreclosure and eviction from their home. However, there are various ways to address this. Let us take a look at loss mitigation, a home mortgage option to stop foreclosure. Loss mitigation is a process wherein the lender and the borrower come to a mutual compromise and prevent foreclosure and allow him to make smaller instalments by reducing interest or increasing term.
It is clear that foreclosure is tragic for the borrower. But it is no good news for the lender as well. If the borrower defaults, the lender has to bear the extra cost of repossessing the house, making it appealing for the next buyer and then actually managing to sell it. Recovery of all the owed money is highly uncertain, especially if the real estate market is not doing well. Hence, it may decide not to risk it and instead place its bets on the existing borrower repaying it if he or she is given more favourable terms. This changing of the terms of original terms is also called as a loan modification.
How does it work?
Loss mitigation in terms of the home mortgage is often referred to as loan modification. In order to achieve it, the borrower has to negotiate with the lender and demonstrate his or her financial hardship and the circumstances which led to default. Getting assistance from loan modification specialists like www.loanmoddepot.com will help you present your case in a better manner. The assistance from loan modification professional can really help since the actual favourability of the terms achieved will depend on how well the borrower presents his situation and negotiates for his demands.