Loss Mitigation is when you try to get the lender to do one of several things:

Reinstatement of the Loan:

     This option is paying the lender everything that is owed in one lump sum to include missed payments, any late fees associated with these payments, foreclosure fees, legal fees and the principal owed during the delinquency. This modification will leave you owing more than when you first got the loan.

Repayment Plan:

    This is a written agreement between you and your lender. These plans require higher payments than the regular monthly mortgage amount for a period of time until the loan is brought up-to-date. Doesn’t make much sense, does it? If you couldn’t make the original payment how can you make a higher payment?

Modifying the Loan:

    Your payments will be extended and the delinquent payments are added to the mortgage balance (only available in extreme hardship situations). Do you have an extreme hardship?

Forbearance Agreement: 

    In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily. The settlement agreement must be at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair market value of the property. Would your house sell for at least as much as what the outstanding balance of the mortgage?

Any of the above solutions will only be considered if you are in "actual" foreclosure.

	Think about this, why would a lender even consider modifying your loan if there is no current problem with your loan?

    Anyone who tells you they can modify your loan and you are not in foreclosure is either lying or doesn’t know what they’re talking about!

    Beware… of anyone telling you they can get you a modification and that the lender is going to respond to them more readily.  Beware!  Beware!

Is A Modification Possible, Can You Qualify And Do You Want One?

    Keep in mind that a foreclosure or a deed-in-lieu may not relieve you of your debt. If the sale of the property does not satisfy the debt - this includes all late fees and legal fees that the lender can seek a judgment of deficiency for. The lender can go after any asset you own and judgments can last for as many as 20 years.