What Are Some Good Loss Mitigation Options?

What Are Some Good Loss Mitigation Options?

Some good loss mitigation options for properties include a deed-in-lieu of foreclosure, loan modification, preforeclosure sale or an assumption of an FHA-insured mortgage, according to the U.S. Department of Housing and Urban Development. Mortgagees seeking loss mitigation may also request an extension of time from their lenders.

A deed-in-lieu of foreclosure is an option in which a borrower deeds his property in exchange for a release of all obligations under the mortgage, explains the U.S. Department of Housing and Urban Development. A loan modification permanently changes the terms of an existing mortgage into a new mortgage with a payment the borrower can afford. A preforeclosure sale, also known as a short sale, allows borrowers to sell their homes and use the proceeds to satisfy the existing mortgages, although the selling price is less than the amount owed.