What is Loss Mitigation?




A common question that comes up when we’re dealing with foreclosure in Alabama is, “What is loss mitigation?”

Basically, it’s anything that you do with your mortgage company to stop a foreclosure.

We may think of mitigation as a way to “stop the bleeding.”

Here are some examples of loss mitigation:

-Loan modification

This is the most common type of loss mitigation.

It’s where you work with your mortgage company and come to an agreement on some or all of the “past due” amount(s).

Maybe the amount gets rolled back into the loan, or it gets put at the end of the mortgage. Usually your interest rate gets reduced.

There’s several different ways the loan can be changed.


This is where they may come in and say, “For the next 3-6 months, you don’t need to make payments.”

-Short sale

A short sale is where you owe $300,000 on a house, but the mortgage company lets you sell the house for $250,000.

-Deed in lieu of foreclosure
This is where we say, “Instead of the mortgage company foreclosing on us to get the deed to my house, I’ll give you the deed to my house.”

There are several other options that can be chosen, but these are the main ways to change your loan.

Contact Us

If you’d like to get in touch with us, you can reach us by phone at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you as soon as possible.

If you’d like to discover our 5 step process that we use when we deal with a foreclosure, you can go to ForeclosureDVD.com.

In this video series, we answer some questions such as:

How do you know where you are in the process?”

Which types of loss mitigation should you ask for?”

How do you ask for the right types of loss mitigation?”

You can also download a workbook that follows along with these videos.

I look forward to chatting with you!

Have a great day.

-John G. Watts

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