Q:

What is loss mitigation?

A:

Quick Answer

Loss mitigation refers to a process through which lenders work with delinquent homeowners to help them avoid foreclosure, according to the U.S. Department of Housing and Urban Development. Loss mitigation measures include long-term loan forbearance, mortgage modification or pre-foreclosure sale of the property.

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Full Answer

When consumers request loan mitigation assistance, the lender usually requires the borrower to explain any hardship that led to the mortgage delinquency, reports the Consumer Financial Protection Bureau. Hardship circumstances include divorce, hospitalization, unemployment and disability. By filing a complete assistance application and providing receipts or other documentation to support their hardship, borrowers have a greater chance of retaining their home.

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