When an individual gets a loan from the bank or a possible lender he secures the loan by mortgaging his home or property. When he fails to pay back this loan the bank will foreclose it in order to recover the loss incurred by the homeowner's failure to pay back its loans. As it is detrimental to the homeowner he might try to prevent it. Thus preventing the bank from such property foreclosure is called loss mitigation.

This loss mitigation is generally initiated by an employee or a representative. Consequently any third party who has a deep interest in the home owner ad his property might also get involved in this loss mitigation.

Usually the lender has no emotional or personal desire to sell the property. All he needs is his loan amount and so he might even try to sell it for less value than the property already holds. So it is always best to allow the third party deal with the mitigation process. The federal government and the mortgage industry created and made this process of mitigation popular.

It helps the home owners who will be losing their land because of loan default payments. A professional loss mitigation counselor will work together with the lender and the home owner and try to arbitrate a balanced deal between the two parties.

However there are certain factors available regarding the loss mitigation which the homeowner can make use of.

?deeds in lieu

?reinstatement quotes

?forbearance programs

?pay offs

?mortgage or note modification agreement

?redemption calculating

?assumptions of the loan

?waivers of redemption

?quitclaim deeds

?affidavits of abandonment

?pre foreclosure short sales

The primary role of a loss mitigation counselor will be to make the homeowner stay where he is. First he might try to modify the loan repayment options or find a realistic way to repay loans. All this must be agreeable to the lender. He might try to pay back partial loan amount pending as arrears and later try to get an extension of the loan term. The homeowner will then try his best to repay the loan amount as son as possible. This is no easy task as both the lender and the homeowner must accept the deal put forth for the benefit of both parties.

If the homeowner does not have enough finance for repayment then short sale might be the only effective way to prevent foreclosure which might lead to bad credit rating for the homeowner. In this case the lender is made to accept the outstanding dues and finish the deal ad accept the payment covered by the sale of property.

Even though it might be lesser than the money due, sometimes the bank might accept to waive the extra amount. The last and final option is the deed in lieu wherein the borrower will voluntarily return the home to the lender. This is the only way to avoid foreclosure and it is advisable to get the help of loss mitigation professional to help you in this at all times.

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