A loan workout sounds like a cross between a yoga routine and a mortgage broker. In reality, a loan workout is what happens when a borrower and a lender agree to modify the terms of a mortgage in order to prevent a foreclosure. Basically, they are changing certain terms in order to make them more affordable for the homeowners, while still creating a profit incentive for the lender and investors, all while avoiding foreclosure.

Now, not every lender is willing to go through this routine with just anyone. The circumstances must be right for certain types of workout agreements to be in all parties best interests. And while the borrower may feel the need to know what the right combination is in order for this to work, it may be impossible to know what will work for the bank and its investors until the borrowers begin negotiating.

What needs to be in place for a lender to consider this option? First of all, the borrower must be in a position where foreclosure is a real possibility. With millions being laid off and jobs scarce, this is not a hard situation to fall into. The borrower is likely behind on their payments by several months. And it usually means that the lender cannot expect to see the payments caught up anytime soon unless something changes to make the situation more affordable.

However, the borrower must also be in a position where they can make some sort of reasonable payments. If someone has lost a job and has not found one yet, a lender is going to be very reluctant to modify loan terms because repayment is not likely to happen. The lender needs reassurance that their efforts to negotiate a solution will pay off before they are willing to do a loan workout with the borrower.

The lender is going to also look at the current situation regarding the amount owed on the house and the home's current market value. With home prices falling all over the country, many people find themselves owing more on a house than the property is actually worth now. These people bought their homes when prices were at their peak a couple of years ago and have witnessed them dramatically decline in value.

Now, some people owe more than 20% over their property's current value. A lender is going to be very reluctant to work with anyone in this situation. For a lender to be willing to do a mortgage modification with a borrower, the amount owed on the property needs to be favorable to the lender. Equity is the magic word for this. If the home is valued higher than the amount due, then there is equity. With equity, the borrower may see the prospects of a loan workout growing.

Do not be foolish to think that the lender is going to be nice to the borrower. In all of this, the lender is going to look out for its interests first. Foreclosure costs are one major aspect of the case that they look at, including how much it would cost to foreclosure and resell the property on the open market. Would it be cheaper just to foreclose on the property and try to resell it?

Be aware that foreclosure costs average over $50,000 per house. But if a property’s value is so far below the amount owed on the mortgage, that amount of money may be smaller than the bank's loss. For lenders, the only thing that really matters is the bottom line, and banks have their bottom line guaranteed by the government more and more these days. But a smart borrower will be armed with the knowledge of what the mortgage company is going to be looking at before they request a loan workout.

Despite all of the incentives that banks seemingly have to work with foreclosure victims to modify loans, most attempts at loss mitigation are still a huge waste of time for homeowners, lenders, and third parties representing them. This is due to a number of factors, with both banks and borrowers having roles in the failure to work out solutions to foreclosure and to keep on top of payment plans over the long term.

One reason that loss mitigation attempts often fail is that it is a very labor-intensive process. Getting a mortgage modification approved by a bank or servicing company can take many more hours than expected, as lenders are currently swamped with foreclosures and calls asking for assistance. If homeowners are not willing to put in the necessary work or pay for someone to do it for them, loss mitigation attempts often fail.

Unfortunately, much of the work to modify a loan is simply waiting for the lender to perform one task or another. It is not uncommon to spend two to three hours on hold, simply waiting for the loss mitigation representative to pick up to confirm a fax or begin negotiating. Voicemails and emails, of course, are rarely answered, and phone calls from homeowners or their representatives may be disconnected numerous times.

The staff of the servicing companies and lenders are typically either incompetent or belligerent when working with homeowners, and few productive results are gained from speaking with them. Almost no one who has had to wait on hold for an hour and then speak with a loss mitigation representative who is unable to confirm a fax was received is impressed with the quality of service offered to homeowners facing foreclosure.

But also, the lack of service from the loss mitigation department of a lender may reflect the lack of specific guidelines for modifying loans. This is a responsibility of the investors and holders of the mortgages, but the securitization of huge numbers of home loans over the past decade has made it almost impossible to know for sure who owns a particular mortgage, let alone how the owners would want it modified.

Of course, this is not to say that it is impossible to modify a mortgage or negotiate an alternative to foreclosure, but homeowners should be aware of just how much work is involved and how little help the servicing companies are when negotiating. Working out a solution to stop foreclosure can often be more difficult than applying for the mortgage in the first place.

Homeowners dealing with the threat of foreclosure should know about as many options as possible, if they are attempting to save their homes before time runs out. Some of these options fall under the category of "loss mitigation," which usually refers to a third party (usually either another company or a division of the bank) that helps negotiate with borrowers to find solutions to foreclosure.

But under this category of loss mitigation fall a number of alternatives to foreclosure that may apply in various circumstances. Some lenders may not offer each of these solutions right from the start of negotiations, but homeowners can always request more information about them if they believe one may be appropriate for their foreclosure situation. The seven solutions detailed below are typically classified as loss mitigation.

Cash for keys. In a cash for keys negotiation, homeowners are offered a set amount of money from their bank to move out. The offer is usually presented by mail or in person through a local third party, such as a real estate agent or law firm. Banks offer such solutions in order to negotiate a peaceful transfer of a foreclosed home and give the former owners some cash in their pockets for moving expenses.

Deed in lieu. A deed in lieu of foreclosure can be offered to the lender by homeowners who are just trying to unload the house, avoid foreclosure, and move out. Borrowers offer to give the deed to the property back to the bank in exchange for the mortgage company not going through with the foreclosure process. At that point, the bank would be able to list the house for sale and attempt to recoup some of its losses.

Loan modification. Much press has given to the idea of modifying mortgages that are in foreclosure. There are a vast number of ways to do this, from lowering the interest rate to extending the repayment period of the mortgage. The only real drawback to this solution is that banks are rarely that enthusiastic about modifications, because a properly structured one will benefit homeowners more than lenders.

Partial claim. For homeowners with a mortgage guaranteed by the FHA, a partial claim may be used to give the bank a one-time payment from the government in order to stop foreclosure. In exchange, a lien is placed on the property, although the lien has a zero percent interest rate and does not have to be paid back until the first mortgage is paid off or the home is sold or ownership is otherwise transferred.

Short sale. A short sale allows borrowers to sell their property for less than the total amount that they owe to the lender. All of the mortgage companies have to accept a lower payoff for the sale to go through, or the homeowners will have to bring cash to closing to pay off any remaining liens. While this can help borrowers avoid losing their homes, banks are not very quick to approve short sales.

Short refinance. With this solution, the bank agrees to lower the total due on the mortgage in order to facilitate a refinance through another lender. Oftentimes, homeowners may be approved for a certain amount of money to refinance, but the amount they owe on the first mortgage along with fees and unpaid interest makes it impossible. A short refinance allows the refinance to go forward and the foreclosure to be avoided.

Special forbearance plan. Under a special forbearance, homeowners can make a lower payment or have no payment at all for a certain period of time. This can be more easily negotiated well before homeowners fall behind, as banks will not be fond of borrowers who ask for lower payments after they have begun missing them. In addition, the homeowners will eventually need to pay back any payments they missed.

Homeowners facing foreclosure have the problem of not knowing what options may be appropriate for their individual situations. And unfortunately, the lenders are often no help, pushing borrowers into expensive repayment plans or filing fraudulent lawsuits alleging foreclosure. However, the more that they know about various solutions that will help them save their homes, the less stressful the situation will be.

When homeowners on their own negotiate with a lender for a loan modification to avoid foreclosure, the owners typically end up with a repayment plan instead of a modification. The differences between the two plans, however, could not be more drastic, and homeowners rarely benefit from a repayment plan as they would under a more specialized mortgage modification agreement.

The main aspect of a repayment plan is both a benefit for banks in the short term and a huge drawback for homeowners. Essentially, this solution to foreclosure allows homeowners to pay back the amount they have fallen behind in monthly payments over a period of time (for example, six months), while still keeping on top of the current payment. The terms of the loan are not modified at all, but the foreclosure process is halted.

While some homeowners who have recovered from a financial hardship and actually ended up with a higher income in the end will be able to afford such a repayment plan, most borrowers make a few payments and go back into default. Because the terms of the mortgage remain the same, and the original monthly payment is unchanged, homeowners have to pay more each month under a repayment plan than they were paying before.

Once homeowners fall behind on the bank's plan, the foreclosure procedures start up again and the borrowers are left to face the situation with one fewer option, more late fees and legal expenses charged to their account, and a lender unwilling to offer them any other solutions. Banks, once a borrower has failed to make their regular payments and then failed at a repayment plan, typically offer little else to help stop foreclosure.

While a properly done mortgage modification could help a large number of homeowners facing foreclosure, for some reason, banks shoot themselves in the foot over and over again by offering repayment plans. These plans are typically too expensive for the family and they end up right back in foreclosure after just a couple of months. In fact, some homeowners are only able to make one payment before falling behind again.

Why lenders offer these solutions instead of providing real assistance to borrowers, though, should be obvious for anyone following the news. There are two main reasons that banks do as much as they can to avoid modifying loans, and why they only offer repayment plans or bad loan modifications if they offer any options at all to their clients. They both have to do with the solvency of the banking industry.

First, if banks modified a loan, it would make the loan less profitable. A loan at 9% interest looks a lot more inviting to a potential investor than a loan at 3% interest. If banks were marking down mortgages to their current market levels, they would have to recognize far greater losses in the short run. So they have adopted a policy of offering repayment plans to borrowers in order to keep losses off the books for an extra couple months.

Second, banks are using repayment plans and the failure of their typical modification programs as political cover. Every time they offer a plan to avoid foreclosure to a family who can not afford it, banks receive two benefits. The lenders are able to tell politicians and the media they are offering plans to borrowers, and they are able to show the failure of these programs when begging for more bailout money. Heads, the bank wins; tails, the taxpayers and homeowners lose.

Too often, banks offer their shoddiest, most expensive repayment plans to homeowners who are negotiating on their own behalf for a solution to foreclosure and who will take any option they can get to avoid a sheriff sale or eviction. But in too many cases, the end result is the same -- the plan is impossible, the homeowners fall behind, the foreclosure starts again, and now there are even fewer options to save the home.

Taking and return phone calls from a mortgage lender's collection department is almost always a losing proposition for homeowners attempting to save their properties from foreclosure. Collection agents usually do not have enough authority to negotiate an agreement, and homeowners may not have the funds necessary to pay the entire amount they are behind.

This is why it is better for borrowers to attempt to get in touch with a senior loan officer, vice president of some sort, branch manager, or the legal department of the bank. In fact, homeowners may want to politely refuse to speak with the collection department since it lacks any means of coming to an agreement to stop foreclosure.

But once the borrowers have gotten the name of someone who can negotiate a workout plan, what next? If the person never calls back, should the property owners give up? And if they do get in touch with that person, what should they say? What is the entire objective in contacting a higher level manager with the mortgage company?

If the branch manager or loan officer does not take the homeowners' calls or refuses to respond to voicemails, the borrowers should document each attempt at communication. All of this documentation should be sent to the president of the company to show how poorly the company responds to foreclosure situations.

But once the borrowers do finally get in touch with someone at the bank who can make important decisions about a loan in default, they should attempt to set up a face to face meeting. This will be easiest if the company has local offices, but many large companies also have higher level representatives who travel in a geographic region and may be able to meet.

Having a face to face meeting with someone at the bank (whether the bank is local or multinational) will dramatically increase the chances of being able to negotiate a solution that is beneficial for the homeowners and the bank itself. If there is any way to get such a meeting, borrowers should take it as soon as possible.

At the meeting, the owners should ask the bank to outline how its own foreclosure process works. Each bank handles a foreclosure a little differently, depending on the bank's internal procedures as well as how many properties it currently has in default. If the bank has a large number of homeowners facing foreclosure, it may be easier to negotiate, since the bank will want to avoid owning more properties.

It is also important for the borrowers to explain their financial situation and propose various agreements that would allow them to save the home. It is up to the borrowers to submit potential solutions, and this will prevent the bank from proposing a plan that is simply impossible for the owners to afford.

Most of the time, the borrowers will speak with someone who is somewhat sympathetic to their situation and will attempt to meet them in the middle with an agreement. But occasionally, banks will hire the more belligerent, mean-spirited person they can and have that person deal with their clients who are not paying their loans on time.

Although this arrangement makes the least amount of sense, bank collections departments are full of such cruel people. If they are forced to deal with such a person, homeowners should not lose their cool, although they may bring up the possibility of filing bankruptcy to stop foreclosure if they are unable to work out a solution.

Another tactic homeowners should use when negotiating with the bank is to remind the manager how much it really costs to foreclose. Attorney fees, maintenance costs, lost loan revenue, property taxes, and insurance all add up. Negotiating a mortgage modification or repayment plan can cost significantly less.

Homeowners should keep in mind a simple structure to the meeting and attempt to follow it as closely as possible to achieve success. Learning how the bank pursues foreclosure is important, and coming to the table with reasonable proposals to stop foreclosure is even better. Remaining calm and mentioning the costs of foreclosure and bankruptcy can also help, if the situation warrants it.

But attending the meeting and negotiating with the bank manager is not nearly as difficult as just getting the meeting in the first place. Lenders do not want to meet with every single person facing foreclosure, but they will take the time to do so with borrowers who are persistent and serious about working out a solution.

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Just as no ship can sail without a plotted course and no plan can take off without a flight plan, no homeowner in foreclosure can contemplate a successful journey to save a home from foreclosure without a comprehensive plan. No one plans to fail and lose their home; it is that most families fail to plan at all before, during, and after they have missed their first mortgage payment. The mission of every reputable foreclosure assistance company should be to help such homeowners put together a plan and then guide them through the completion of that plan.

At the most basic level, the level of the desperate family speaking to the loss mitigation or legal professional, planning is nearly always easier and less complicated than people expect.

The first place to start is by assessing where each homeowner is right now. This includes what they own, what they owe, what they earn, and what they spend. Of course, this is nothing but collecting baseline data; it does not deal with what the family wishes to do to get out of foreclosure or how they are going to do it. But this gives both the professional and the homeowners a clear, shared understanding of the first, most basic thing that anyone beginning a journey needs to know: exactly where they are starting from.

From there, a sort of wish list is created, detailing exactly the most preferable means of solving the crisis and how to begin recovering financially afterwards.

This is also a pretty straightforward process because it focuses on a few choices to be made. What do you want to do with the house? Sell it? Or keep it? And if you decide to keep it, how much can you afford to spend on it per month? Do you qualify for any government programs or assistance through local private charities? If you work with the lender, would a repayment plan be affordable? Or is a mortgage modification the only option? What would you do if you could?

Then the professionals and the family get out a calculator and see if they can turn those goals and dreams into a clearer picture. Some questions they will answer will be, How much will it cost for any solution? What is the gap between where you are now and where you would like to be? How much time do you have to accomplish this? Can we get you from here to there?

If the loss mitigation company finds out that the homeowners can get to where they want to go, then there is already a strong base to build a plan on. If not, then the homeowners may have to consider some trade-offs. Maybe they can get an extension of a sheriff sale but will not have enough time to sell or refinance. Or they may be able to refinance but would have to give up the extra car in order to meet the new mortgage payments. The borrowers will have such decisions to make, but when this process has settled, the basics of a plan will have been framed.

At this point, the assistance company and homeowners will begin to rely more heavily on the specialists -- the lawyers, loss mitigation professionals, and financial experts. They will be the ones negotiating with the mortgage company, its attorneys, and possibly even the courts and government officials, working out the technical ends of the plan.

The most important point for homeowners to consider is making sure the company they are working with delivers a plan that is complete and does what the parties agreed upon. Borrowers should stand up and request the assistance company to keep sending the experts back to the drawing board until the plan is just right.

Then it really becomes an issue of giving the plan the right amount of resources in the right time frame in order to complete it and stop foreclosure as efficiently as possible. Of course, as circumstances change, the plan may have to change on the fly, but homeowners should be able to follow through and meet their own financial commitment to saving the house.

In a nutshell, this is how the experience with a reputable loss mitigation company should work. What can not be described is the tremendous weight of concern that is lifted from homeowners when they know they have a first-rate plan in place. No one can relieve borrowers of the responsibility for their own success, but a comprehensive plan and a compassionate, informed assistance company can take away much of the anxiety involved with foreclosure situations.

Putting together any reasonable plan to avoid foreclosure and following it through requires hard work from homeowners, lenders, and any third party companies that are involved. Because of the long legal process, high foreclosure rates, and the fact that many borrowers lack knowledge of how their mortgage works, it can take months to find a solution. But for homeowners who are unable to save their homes, it is not always simply their fault.

No matter how hard some borrowers work towards finding a solution to foreclosure, sometimes there are circumstances that will not allow them to fix the situation. Unfortunately, most of these circumstances revolve around the mortgage company's unwillingness to offer any meaningful, realistic plan that the owners would be able to complete. Expensive repayment plans or declined loan modifications without a counteroffer or explanation do not help families save their homes.

With the foreclosure rate having increased by over 50% from a year ago, and numerous government programs being created to help homeowners, banks have fallen far behind on providing assistance to defaulted borrowers. Some loss mitigation representatives report having hundreds of cases to work on, and in states with a quick foreclosure timeline, homeowners may find themselves facing a sheriff sale before they have made any real progress towards applying for a modification or foreclosure loan.

While some lenders may be willing to halt a sheriff sale in order to give borrowers more time, this is simply postponing the inevitable if the bank does not utilize enough resources to provide a final solution to stop foreclosure. A few more weeks of bank representatives not returning calls or answering their phones when owners call and the property auction will have to be postponed again. But with each such delay, more legal fees, interest, late fees, and other charges are added to the loan, making it more difficult for the owners to pay off the arrears.

In fact, the failure to communicate with clients is possibly the most frustrating aspect of the process of losing a home. Neither the bank nor its local attorneys are usually any help in getting timely information to owners, with the lender having to check with the attorneys and the attorneys having to check with the lender for even such simple figures as a loan payoff. And neither the bank nor the lawyers ever call back the owners to provide them with the requested information -- if homeowners want to find out what is going on with the loan, they must do everything on their own or hire a company to provide assistance.

Thus, it is not surprising that so many mortgage companies and servicers are suspected of deliberately pushing homeowners into foreclosure and jacking up the fees once payments are missed. Houses with significant equity can be underwater in just a few months, once the bank adds interest, late fees, interest on late fees, and legal expenses. Then they refuse to communicate with owners who are attempting to work out a solution to prevent the foreclosure from going all the way through.

But the whole lending system in this country has been based on an adversarial system in which banks have the ability to cheat by creating money out of thin air. Loans are only created by the signature of borrowers and their willingness to pay the lender a certain sum of money -- but the money does not exist until the borrowers promise to pay it back. And when they are unable to pay back money that did not exist until the lender created it... well, then the bank gets to take the house and attempt to sell it on the market to make up its "loss" on money it never had.

Although banks are quite adept at playing the victim card and pretending that they are losing money hand over fist due to deadbeat homeowners, the opposite is the case. Owners were propagandized during the housing bubble, given mortgages with predatory terms, and tricked into taking out as much money as possible in order to consume more for the good of the economy. Resetting monthly payments and decreasing property values, while creating paper losses for lenders, have put millions of former homeowners into the street.

Now bailouts are given to the banks and investment firms through the Federal Reserve's inflation machine, while homeowners are given new laws and government programs to attempt to qualify for in a vain attempt to keep their homes. While the higher prices all of us pay for food and energy are now mandatory on us, though, these new programs for foreclosure victims are 100% voluntary for the mortgage companies. So when the loss mitigation department never calls back to go over a mortgage modification, the bank can still claim to be participating in the government system, albeit voluntarily.

Homeowners who fall behind on their mortgages will often try and work out a solution with their original mortgage lender before moving on to any other options. Lenders often require people in foreclosure to fill out loads of financial paperwork, submit copies of income and tax documents, and explain why the fell behind on their loan. It is this explanation in the form of a hardship letter that is designed to pull everything together.

Although the hardship letter may not always be read by the loan workout specialist, it is important to put in the effort to make the letter as detailed and individual as possible. There are numerous templates and examples of hardship letters available online, but simply copying and pasting a little bit of information into a standardized document will almost guarantee that it is not read.

Most bank representatives can tell in a glance whether a hardship letter was written by the homeowners themselves or if it was most likely taken word for word from an online template. The people working in the loss mitigation department in large mortgage companies receive numerous requests for help every day, and they quickly learn to discount hardship explanations that have nothing to them.

Of course, this is not to say that homeowners should ignore the examples that they find online, but these should be used as guides. They should not be used as a simple way to avoid explaining the reasons why they faced a hardship, when it happened, how long it went on, and why it has gotten better and that they can afford their mortgage again. The form of the templates can be especially helpful because most homeowners have never written a hardship letter before, but the content of the letters should be highly individualized.

One of the most important reasons to customize the hardship letter as much as possible is to iron out any remaining weaknesses in the homeowners' financial position after the hardship. A change of job in the past few months or a substantial decrease in one income can be explained away in the letter, with the possibility that the lender will take these deficiencies into account but emphasize the more positive aspects of the owners' economic conditions. the hardship letter is too valuable of a tool to rely on just a homogenized template that ignores these kinds of specifics.

Many third party loss mitigation companies who work extensively with lenders will not even recommend using a hardship letter template because of the possibility of it being ignored by mortgage company. They are more likely to advise homeowners write their own hardship letter, explaining what needs to be included in it, rather than giving them an example to plagiarize from.

Frequently, it is the more detailed and individual hardship letters than grab the attention of the bank's workout specialists and persuade them to see the situation from the homeowners' point of view. Thus, the hardship letter can be a powerful tool to convince banks to consider a mortgage modification, repayment plan, or other solution. Relying on someone else's generic hardship letter template can only mean the chances the bank will approve such a plan will decrease.

It should be obvious to every homeowner that their situation leading to foreclosure is vastly different from every other person's. When attempting to work with the bank for a solution, it is necessary to explain the specific circumstances that led to the default, and a customized hardship letter is absolutely required. Using online examples is a good start, but homeowners need to convince the bank that they deserve a second chance -- not that they have great skill at using search engines and their computer's copy and paste features.

One of the most important decisions homeowners will make when facing foreclosure is whether or not to hire a third party company to help them save the home. There are hundreds of news stories and complaints online about disastrous experiences people have had with foreclosure scam companies, but many homeowners do not feel competent enough to deal with the mortgage company on their own. In this case, it may be a good idea for the foreclosure victims to consider hiring outside assistance, but they must exercise a good deal of caution before trusting anyone to help them stop foreclosure.

Like with most industries, there will be a vast number of foreclosure help companies that do well by their clients, some that are incompetent and will fail to provide useful services, and a small number that are downright criminal and see their customers as targets rather than as sympathetic homeowners in need of assistance. It will be up to the homeowners, though, to make sure they choose to deal with one of the companies that acts honestly and provides a good service. This takes a good amount of homework in interviewing several companies and looking up any complaints or testimonials.

Foreclosure assistance companies can provide useful help to homeowners, but the extent of their services and their effects will depend largely on how much the homeowners are willing to do on their own. If the owners would rather negotiate with the bank themselves, and try and work out a mortgage modification or other payment arrangements, then there is a good chance they can probably do just as good a job at this as any foreclosure assistance company. There is no real "best way" to stop foreclosure; any plan that is affordable for the owners and agreeable to the banks will get the job done.

On the other hand, if the homeowners have outside lives and are not able to spend several hours a day on hold while waiting for the lender to pick up the phone, and they do not really know what to ask for and do not have the time to do all of the research about how foreclosure works, then it might be a good idea to hire a company to perform these tasks. If the company offers their services for a reasonable price and there are some guarantees the owners can get a refund if the company is unable to stop foreclosure, then it might be worth offloading the work.

Homeowners absolutely need to be prepared, though, to do some of the work to qualify for a plan to save the house. There is almost always a lot of paperwork to fill out and the owners might have to prove stable enough income to qualify for a plan. No foreclosure help company can work magic and make it appear as if people can afford a mortgage payment that is obviously out of their income range. While a high-quality assistance company will do everything they can to negotiate for better terms, they can not completely do away with the mortgage payment altogether forever; eventually, the owners will need to make the effort to get the payments caught back up, and this usually requires a higher monthly outlay, for a time.

The best thing for homeowners facing foreclosure to do might be evaluate their current financial situation, figure out where they can get more income or cut expenses, then decide if they will be able to do the negotiation work with the mortgage company on their own. If they do not have the resources to do this, they may want to consider calling a number of different foreclosure help companies, find out what they offer for how much, and what their refund policies are if they can not help save the home. Assistance to help save a home is available from any number of companies, but homeowners need to decide if there is a chance they can save the home to begin with, and then need to find a reputable company to guide them through the process.

For many homeowners facing the loss of their home, hiring a loss mitigation company can make a great difference in reducing levels of stress and having the best chance to put together a plan with the lender. Loss mitigation professionals are able to negotiate with mortgage companies for solutions that allow homeowners to get out of the foreclosure situation and establish a reasonable payment plan going forward. However, it is important that homeowners know when to take advantage of the services of a loss mitigation company, and when the chances of success may be low.

Especially if the bank has denied a foreclosure victim's loss mitigation application because that option had already been used but failed, the bank may not be willing to reopen negotiations. The question in that case should be, what makes the homeowners think any other company is going to be able to get a better result at this point? Loss mitigation companies may be able to speak with the bank, but if the homeowners' financial situation has not changed appreciably, then the exercise may just be a waste of time.

Unless the homeowners are somehow able to find a foreclosure help company that can assist them in obtaining more income or is willing to give them extra money to offer the bank, the loss mitigation company will probably not be able to make much progress. Of course, if the homeowners have come up with some extra money they can disclose this to the loss mitigation professional, who will offer the bank a higher amount. If this is the case, the homeowners may wish to consider loss mitigation, but also contact the lender for any extra guidance.

But no loss mitigation help company can work magic and put homeowners with no way to afford the loan back into their home. They will not be willing or able to force the bank or trick them into approving a repayment plan that the homeowners could not keep up with once before and will fail at again. (And any loss mitigation company willing to participate in fraud with the homeowner is probably one to stay far away from.)

The bank will just tell the company that the foreclosure victims had already been given a chance with a workout program and had not completed the plan as agreed, so the mortgage company is unwilling to do anything more to help. Then the loss mitigation company will be able to say they did their part in negotiating with the bank, even though they simply told the foreclosure victims what they already knew.

Thus, if the homeowners have fallen behind on their mortgage, established a repayment plan, and fallen behind again, there may be few options that even a loss mitigation company could present. Thus it probably would not be a good idea to pay anyone else to give the homeowners a result they already have. If they were just deathly afraid of calling the lender and wanted to hire someone to work with them to stop foreclosure, and had not attempted loss mitigation on their own yet, that would probably be an appropriate situation in which to involve a loss mitigation professional. But if they have already tried negotiating with the bank, and have given them all of the necessary documents, there might be very little the loss mitigation company will be able to accomplish.

They may be able to pull out some new trick, but the possibility is pretty slim. The homeowners in such a case may be spending quite a bit of money on the loss mitigation services just for a small chance another solution would present itself. Loss mitigation can be a great opportunity for homeowners to reestablish the mortgage payments and have a second chance to save a home, but entering into a plan should not be undertaken lightly. Breaking a workout solution will make it much more difficult to get another plan, regardless of who negotiates on their behalf.

In many cases, it is possible to negotiate with your lender on your own. Even though we now believe that using an experienced professional can drastically increase your chances of approval and save you tens of thousands of dollars over the life of the loan, home owners are still encouraged to make an honest attempt on their own, before hiring a professional.

Here are the steps you will need to take before you begin:

1. Gather all your income and expense documents for the last two years. You should have paystubs, income tax returns, bank statements, property tax statements, and proof of any other income you receive.
   
2. Prepare a hardship letter that includes exact dates when your hardship started and ended, as well as documentation to collaborate your hardship claim. This should be as detailed as possible and should be typed, so the agent can clearly read and understand the letter.
   
3. Contact your lender once you are two months behind. Most lenders will not negotiate with you until you have missed a few payments, so even if you have contacted them previously, with no results, you will need to do it again.
   
4. Once you have contacted the lender, tell them that you would like to apply for a loan modification or workout plan. Both of these options may be available, depending on your financial situation.
   
5. Your lender should send you a financial worksheet to fill out and return to them with the financial documents you have already gathered. You should try to fax this back to them the same day. In some cases, you can complete the entire process in a single day.
   
6. Once you and your lender have verbally agreed to a workout plan, you will need to get everything in writing and send them a payment as soon as possible. In many cases, if you qualify for a loan modification, they will require you to begin a “stop gap” repayment plan, while you wait for the modification to go through, which can take up to 60 days.

You should be prepared for long hold times (sometimes up to an hour and a half) and don’t expect the agent to always be friendly, but they will help you if you are persistent. Your lender will be looking for several things to see if you qualify, but the main qualification will be to determine if you can afford to keep the home. You will need to show that you can afford the monthly payment, after all your other monthly expenses. If you are attempting to get a repayment plan, then you will need to be able to afford your normal monthly payment, plus the added amount to pay off the arrears. In general, the arrears must be paid off in 18 months or less and you will need a minimum of one and a half payments to begin a repayment plan.

If you are not successful working with your lender on your own, of if the payment plane they set up for you is unaffordable, then you may want to consider another option, or you could hire a professional loss mitigation company to negotiate a better plan for you. Regardless of what option you choose, if you can afford your home, and you have recovered from your hardship, then you should be successful at saving your home from foreclosure.

One common method that homeowners in foreclosure may have available to save their homes is to put together an agreement with the mortgage company to repay the amount they are behind over a period of time. This is called a forbearance agreement. Another similar option is working with the lender to alter the terms of the loan through a mortgage modification, which may result in the missed payments being put on the back of the loan, or the interest rate being lowered for a period of time. Both of these plans can give homeowners an important opportunity to get back on track with the mortgage, but lenders have strict guidelines that must be met to qualify for this type of program. Homeowners will have to fill out various forms and submit their personal financial documents in order for the bank to consider offering them one of these solutions. The importance of having these documents completed and accurate can not be overstated, as banks may just let the file sit until the package is complete.

Possibly the most important document the homeowners will need to submit is a hardship letter, explaining how they fell behind and what they have done to recover from the hardship. They should also state how the problem has been solved so that it does not recur in the future. This gives the homeowners an opportunity to describe the crisis as beyond their control, such as sudden medical problems, a death in the family, divorce, or job loss, among other possibilities. Often, the hardship letter can contain various solutions that the foreclosure victims are proposing the bank consider, as well as statements that they will be able to pay the mortgage on time from now on. The hardship letter is the tool homeowners use to make their case to the mortgage company of why they should not be foreclosed on, but given another chance.

Another important piece of the financial puzzle for the bank is recent paystubs, showing how much the homeowners earn. The mortgage company will want to evaluate whether or not there is a strong possibility of the loan being repaid in the future. A current stable income is one of the best ways they can decide how much the homeowners can reasonably afford, and how long the payment plan term should last. Obviously, since the foreclosure victims are attempting to pay their normal payment as well as a portion of the arrears every month, the lender will have to make sure this does not take up too much of the homeowners' income. If the repayment plan is too expensive, the loan will go back into default and foreclosure. The paystubs should show income over at least a period of one month, and they should be recent and consecutive. Submitting one from August and another from November does not show a stable income.

Bank statements are also important, for two reasons. The first is to show the lender that there is an emergency fund or extra cash in the bank that the homeowners can use if they fall behind again. The second reason is to show the bank what kind of spending habits the foreclosure victims have engaged in since falling behind. If they have been saving money or using their lowered income to keep on top of other bills, then the bank will look more favorably on offering a payment plan or loan modification. However, if the bank statements show that the homeowners have been spending money on unnecessary items, such as frequent shopping trips or online purchases, when they could have been saving money to pay the mortgage, this indicates to the lender that the homeowners are irresponsible with their money and will have trouble in the future paying the mortgage. Bank statements should also be recent and consecutive in order to give the bank a more general overview of the homeowners' spending habits.

The final documents that homeowners will need to present to the bank are tax returns for the previous two years. Tax returns show the lender that the homeowners have generally stable income, but suffered from a temporary hardship causing them to fall behind. This is important, because it serves as evidence backing up the claims made in the hardship letter that the crisis was involuntary, unavoidable, and uncommon, although it has not been rectified. Simply filing tax returns also shows that the homeowners are not trying to get out of paying their federal income taxes and shows that they were not just trying to get out of paying their mortgage for a few months. But the actual financial data will be most important, as a stable or increasing income will prove to the lender that the homeowners are generally financially stable over the longer term.

Besides these documents, lenders will often have their own forms and financial status reports that must be filled out. But homeowners who are working with their lenders, or working with a loss mitigation company to deal with the lender for them, need to be aware of the importance of having these documents. Without all of them, the mortgage company can not make the most informed decision possible about the current state of the foreclosure victims' finances, and they will turn down the proposal for a repayment plan or loan modification. It would be a tragic occurrence if the homeowners lost their homes to foreclosure simply because they did not have this information readily available to be submitted to the lender. Thankfully, loss mitigation companies and the banks provide checklists to the homeowners to make sure they have submitted everything necessary, but a failure to read and comply with these documents will typically result in a failure to save the home.

Possibly the most recommended way to avoid a foreclosure is for the homeowners to work out an arrangement with their lender to get their payments back on track. Almost every news story, article, and foreclosure blog tell foreclosure victims to call their bank as soon as they miss a payment and try to put together a forbearance agreement, loan modification, or other repayment plan. But homeowners who rely on only this option to save their homes must often wait weeks or months for the bank to review their application, finding out at the last minute that they have been turned down and are now facing the sale of their homes at the foreclosure auction. While attempting a workout program should be the first step for homeowners trying to stop foreclosure, not having a more comprehensive plan will ensure that more foreclosure victims lose their homes than is necessary.

Plenty of homeowners have gone through the lengthy situation of locating, assembling, and submitting all of their personal financial data and having the bank take 1-3 months to "consider" a workout program. In the meantime, the foreclosure victims continue missing mortgage payments, the lender continues accelerating interest, late fees, and court costs, and the foreclosure process continues, as well. This obviously makes for a stressful time, as homeowners are left with seemingly little to do other than wait for the lender's approval or rejection. Lenders, on the other hand, quite often turn down the homeowners at the last minute, just days or weeks before the scheduled sheriff sale. Because the homeowners may be so far behind, or have not completely recovered from their financial hardship, the lender's repayment plan may be too expensive and they do not trust that the foreclosure victims will be able to complete the plan and get their mortgage back on track.

This is not to say that this happens in every situation and homeowners are always left hanging at the end of the foreclosure process, but they should also be looking for alternative plans in case they are not accepted for a workout arrangement. There are a number of questions every family should ask itself when facing foreclosure and looking for solutions. What will you do if they turn you down for the repayment program at the last minute? What will you do if the workout plan is so expensive that you know you will only be able to make one or two payments on it before missing another payment and possibly facing foreclosure again ? What will you do if there is another financial setback during the time of the repayment plan and you have not established a savings plan?

These are not pleasant questions, of course, but homeowners simply have to plan for these situations, especially the possibility of the bank turning them down at the last minute and what their plans will be to have the sheriff sale stopped. Foreclosure victims, in all circumstances, need to put together some backup plans to stop foreclosure, like refinancing, private lenders, hard money loans, bankruptcy to stop foreclosure, and selling the home. Even hiring a third party loss mitigation company may be beneficial at this point, so a neutral company can negotiate with the lender for a more fair workout agreement. If homeowners just rely on one option to save their homes, though, there is a good chance they will end up very disappointed in the end, or searching frantically for some way to postpone the sheriff sale at the last minute.

In the end, homeowners should follow the simply rule of not trusting their lenders. In fact, they should not trust anyone but themselves to solve the problem of foreclosure. But they should not put blind faith in a lender to work out a repayment plan for them without knowing what the qualification criteria will be, and having a firm date for when the application should be approved or not. Far too often, foreclosure victims are not sure if their files are sitting on a low-level employee's desk right now with a big REJECTED stamp on it, and they may not hear about this decision for weeks or months. This is why homeowners need to make plans for what they will do even if the bank says no to a workout agreement. Having numerous backup plans to avoid foreclosure will give every family a much better chance of keeping their homes.

No matter what kind of mortgage company you have, whether it be a small local bank or a huge multinational corporation, chances are that they will want to avoid foreclosing on your house as much you want to save it. The most important thing in any foreclosure situation is keeping in contact with the lender and informing them of what is being done to stop foreclosure. That way, the bank will be more open to putting the foreclosure process on hold, postponing the sheriff sale, or qualifying you for a forbearance agreement or mortgage modification in a timely fashion. Most mortgage companies will provide you with extra time to find a solution to foreclosure, but you have to give them a compelling reason to do so.

It can not be unclear to a mortgage company what you you are working on to cure the default, whether you are applying for a new foreclosure loan, selling the house, or just saving up over time to pay back the amount that is due. But no matter what is the case, it is vital to contact the mortgage company and ask them to hold off on the sale of your property or give you more time before the court date, and tell them how you are working on fixing the problem. You may want to put the plan to save your home in writing and send it to them, as well, along with supporting documents, like a bank statement showing how much money you have or a preapproval letter from a mortgage company. This will help convince them that you are working on something substantive that has a realistic chance of success.

Without putting your plan in writing, though, all the the mortgage company has to rely on is your word, and that may not be good enough now that you are facing foreclosure. Especially after missing a number of mortgage payments, it is not in their interests just to trust you, and it will cost them more money and time to stop the sheriff sale or start the foreclosure process all over again. But with something in writing, they can at least determine how realistic your solution will be. This is also another reason to include supporting documents, such as proof of a steady income, a recently-done appraisal or title search.

It is also important to contact the bank as well as and their attorneys handling the foreclosure. Many mortgage companies are large banks with many employees, so there is a good chance your written request for a postponement will get lost or end up on the wrong desk. With local banks, this may not be as much of an issue, but it is still a good idea to inform the lawyers office of what you are trying to work out with the lender. The attorneys can forward your request to their contact at the mortgage company, which may be different from your contact there. The attorneys can not postpone the trustee sale on their own, but they can forward the information to the correct person at the bank. Although this will not prevent the request from getting lost or being ignored, it will give you a paper trail you can refer back to later, if the bank claims you did not try working out a solution with them.

Both the bank and the attorneys have an interest in giving you more time before the foreclosure or postponing the foreclosure auction, as they will end up with more money if you can cure the foreclosure. They will lose money if the house is sold at sheriff sale, so if you have a good solution, then they will be willing to give you extra time. Just make a good case, put the request in writing with documentation of what is going on, and make sure it gets to the right people. Finally, do not wait even one extra minute before contacting the bank to work with them, as the more time you give them to make a decision about how to proceed with the foreclosure, the more time they will give you to work through your plan to stop foreclosure.

Many homeowners, when facing the possibility of foreclosure, feel that their financial situation has gotten completely out of control, and that there is no place to turn for help. While most of our website is designed to help homeowners stop foreclosure on their own, there are situations where the presence of outside, third-party help can provide foreclosure victims with the extra help they need to save their homes.

The most common area that homeowners can receive foreclosure help in is the area of loss mitigation, whereby the homeowners work with their bank to put together a plan that will get them out of foreclosure and back on track with their mortgage. Often, though, the bank will not offer the homeowners the most affordable repayment plan that is available, trying to get as much money as possible from the foreclosure victims. When homeowners have attempted working with the bank to stop foreclosure and have been turned down for the basic repayment plan, a loss mitigation company can step in and attempt to work with the homeowners and the mortgage company to come to a common understanding.

Loss mitigation companies are often able to take the homeowners' financial information and put together the most plausible scenario that the bank will accept to give the homeowners another chance. These plans may involve standard forbearance agreements or loan modifications, in most cases, but the mitigation company will do whatever possible to make sure the foreclosure victims are given the best possible solution. Unfortunately, the main problem arises when the bank is not willing to work with the homeowners, or will not approve a repayment plan without a significant amount of money up front, or a monthly payment that is unmanageable. At this point, it is usually up to the homeowners to decide what their next step will be: either turning down the loss mitigation solution or doing their best to complete it and get the mortgage back on track. This is often not a very easy decision to make.

Obviously, the quality of the loss mitigation company is very important, to ensure that the homeowners have a professional team working on their situation. There are enough stories of foreclosure victims being taken advantage of by various loss mitigators, so it is wise for any homeowner to get as much foreclosure advice as possible, before committing to a particular company. However, the homeowners' relationship with their own mortgage company is potentially the most important factor. If there is no trust or willingness to work together between the homeowner and the bank, there is very little that the loss mitigation company will be able to accomplish.

This is why homeowners need to attempt working with their bank first, and make the case that they are seriously interested in finding an option that will stop foreclosure. If negotiations break down, then a third party may be brought in to help come to some common ground, but foreclosure victims simply can not rely on anyone else to begin the process of saving their home. There are good loss mitigation companies and bad, good mortgage companies and bad, and good relationships between banks and their clients and bad ones. When attempting to work out a solution to foreclosure, it is necessary for homeowners to have a good relationship with their bank, which makes it much more reasonable that the mortgage company will act reasonable towards the loss mitigation company. Then it is a simple matter of the homeowners finding a reputable loss mitigation company to work with and putting together an affordable plan to save their homes.

Foreclosure victims are recommended over and over again to try to work something out with their banks, either through a loan modification, special forbearance agreement, or other bank workout program. And while this is a valid option that homeowners can use to save their homes from foreclosure, there are a few large issue with these types of arrangements. Namely, they can be very difficult to qualify for, require a large up-front payment, and substantially increase the homeowners' monthly payment.

In order to qualify for a bank workout program, the foreclosure victims usually have to be behind by at least a few months. As can be expected, the banks are setting the homeowners up to fail, as three missed mortgage payments effectively disqualifies them for a traditional refinance, and begins the process of destroying their credit. Also, those missed payments will have to be made up somewhere along the line, whether it's four payments or fourteen. The total amount of the payments will be taken into consideration when spreading them out over the term of the repayment plan or modification. Because this amount will be amortized over a shorter or longer period, depending on the circumstances, the homeowners' payments will increase, making it difficult to qualify under the lender's debt-to-income ratio requirements.

Furthermore, most mortgage modification or forbearance plans require the homeowners to put down a substantial amount of cash to begin the plan. Usually, this amount comes out to 40-60% of the total amount of arrears. For example, if a homeowner is behind by a total of $10,000, then they will have to come up with $4,000-$6,000, on average, to begin the workout program. In most instances, if the foreclosure victims had an extra $4,000 lying around, they would not have ended up in foreclosure to begin with. The banks know that many homeowners will not be able to come up with this amount of money, but offer no other viable solution to the homeowners to help them stop foreclosure.

The payments for a loss mitigation program will also be increased over and above the homeowners' regular monthly mortgage payments. This is because, after putting down the amount to begin the plan, there is usually quite a bit of arrears that need to be paid back. This amount is spread over 3-12 months, generally, with interest accruing on the unpaid balance. Foreclosure victims on such a plan would have to make their normal monthly payment, plus a portion of the arrears remaining to be paid back, or else the bank will begin the foreclosure process again. It is not uncommon for banks to offer homeowners a repayment plan with payments that are nearly twice as much as their regular payment. Again, if the foreclosure victims could afford two mortgage payments, they probably would not have fallen behind in the first place.

It seems that most bank workout programs, forbearance agreements, or loan modifications are designed to give the banks one last chance to play the "Good Guy," before sending the homeowners into foreclosure. By offering an unreasonably expensive repayment plan, lenders are just playing a game of "Look How Hard I've Tried" with their clients, in an effort to pin the blame squarely and solely on the foreclosure victims. This is why most homeowners need more options to stop foreclosure, in case working with the lender does not present any reasonable solution. Short sales, , foreclosure loans, deed in lieu of foreclosure, and several other options should be considered. Unfortunately, as homeowners are turned away by their banks, they too often simply give up on their mortgages and walk away from their homes, with the lender assuming no blame, because their expensive, unreasonable, illogical workout plans were the "best attempts to help our clients" that they could come up with with the least amount of work, knowing their clients would most likely fail.

There may be some confusion among homeowners as to what "loss mitigation" really is, who does it, and what it is used for. In short, loss mitigation is when a bank will work with a homeowner facing a financial hardship to put together some sort of agreement. This may include a mortgage forbearance, loan modification, or other payment plan. Loss mitigation, however, also includes a much broader range of services offered by lenders and third parties, as well as being an option that homeowners can use to stop foreclosure on their own.

Most lenders have a foreclosure or loss mitigation department, which is where a loan in default usually ends up after the homeowners have missed several payments. The file is typically assigned to one specific representative who represents the lender and is in charge of either collecting the missed payments, or putting together a plan with the foreclosure victims to bring their loan current. Mortgage companies have various programs with various qualifications, but loss mitigation is one of the first options that homeowners should attempt in trying to save their homes. It is widely receommended for homeowners to work with the lender on their own before involving any third party company to negotiate on behalf of the homeowners.

Loss mitigation is also used to describe a whole segment of the foreclosure industry. These third party loss mitigation companies offer homeowners the opportunity to relieve some of the burden in talking to the lender. Lenders, in many disturbing instances, have been known to be rude or insensitive to their clients when the mortgage is in default. In these cases, homeowners may hire a loss mitigation company to assist them in putting together a repayment plan or loan modification. The charges for loss mitigation services vary widely, with some charging several thousand dollars up front, and others charging only if they are able to work out an arrangement.

With the recent rise in foreclosure rates, professional loss mitigation companies have come under fire by some critics, due to the unethical practices of some of these companies. Most complaints involve a loss mitigation company charging several hundred or thousand dollars up front to work with the lender, and then not actually doing anything for the homeowners, who end up losing their homes in the end. This is one reason that foreclosure victims should evaluate the company they are doing business with, and make an informed decision whether to work with a third party mitigator or not. Loss mitigation companies can provide a valuable service to homeowners, but, as in every segment of the industry, there are a large number of foreclosure scams, as well.

Loss mitigation can apply either to the department in the bank attempting to work with their clients, a segment of the foreclosure industry that specializes in helping homeowners negotiate with their banks, and specific companies who specialize in these services. Not every lender or loss mitigation company is the same, and each should be judged by its merits and their assistance should be used to stop foreclosure only if this is one of the options that homeowners have decided that they can not work with their lenders on their own.

Information is one of the most important resources homeowners need to save their homes from foreclosure. One of the more informative foreclosure help websites online today is presented by American Foreclosure Specialists. Their website provides useful information relating to foreclosure and the industry in general, as well as offering professional loss mitigation services.

This weekend, we received couple of posts from loss mitigation specialists in the foreclosure industry. As they feel they raised some questions about loss mitigation, we would like to answer their concerns.

We are not in the habit of taking down blog entries or comments and do not want to begin that habit with our new blog, but we feel an exception had to be made in this case, as these posts contained negative comments about the blog and made some inaccurate assumptions regarding the services provided by ForeclosureFish. We will not attempt to censor their posts or remove them completely, but will respond to them as professionally as we are able.

We also wish to state that we do not believe that every loss mitigation company is in the business of stealing money from their clients. There are always good companies and bad companies, as well as good people and bad people. This applies to all industries and should be self-evident. However, in our experience in dealing with homeowner complaints about a large number of loss mitigation companies, as well as the various foreclosure news stories that appear on a daily basis about foreclosure scams offering pointless mitigation services, we feel it necessary to inform homeowners of the proportionately high chance that they may be taken advantage of by these companies.

We will quote the comments from these posters and then respond to them below.

“You are writing about services you do not have full knowledge of.” [Donna Atwater]
-Of course, we are always adding more to our knowledge of foreclosure situations and how best to assist homeowners stop foreclosure. Anyone who claims to have “full knowledge” of the foreclosure industry is simply lying, and we make no claim to know everything about foreclosure. However, we believe our mission and track record speak for themselves and we are licensed real estate brokers and bank managers, and have industry experience in the areas of financial planning, accounting, investing, and loss mitigation (which we offer as a free service and teach homeowners to do themselves).

“I am a loss mitigation consultant and have helped many homeowners get payment plans, loan modifications, hardships, etc… when they were previously unsuccessful with their lender.” [Donna Atwater]
-That is fine to hear that you have chosen to assist homeowners, and every new person who legitimately helps homeowners stop foreclosure is a welcome addition to the industry. Hopefully, you do not take up front fees from clients and then provide them with information they already know or recommend bankruptcy as an option (two common complaints about loss mitigation companies). Also, you do not state what you offer when homeowners are unable to qualify for the one specific service you offer. Bankruptcy? Nothing? It would be unfortunate if a homeowner did not save their home through loss mitigation and then found out they did not have enough time to pursue another option.
-You help homeowners get these plans, but are any of them beneficial to the homeowner? How many end up with hardship program payments more than their current payment? How many end up failing the repayment plan in their first few months of initiating it?
-If we are offering our qualifications to help homeowners in foreclosure, then it should be known that the professionals at ForeclosureFish have extensive experience in the foreclosure industry, real estate and mortgage markets, and the financial industry as a whole. We have experience in personal financial planning, loss mitigation (which we offer for free), accounting, investment planning, managing branches of nationwide banks, and real estate brokerage. We use all of this experience to help homeowners stop foreclosure by whatever means are most conducive to the specific situation. Unlike most loss mitigation companies, we do not focus on only one area of foreclosure solutions.

“Most of the homeowners that come to me have already exhausted all their options, including trying to refinance. When a homeowner is behind on their current mortgage most lenders, with decent terms, won’t touch them.” [Donna Atwater]
-What happens to the other homeowners that come to you who have not exhausted all other options? In our experience with loss mitigation companies, the company will charge the homeowner for mitigation services, whether they qualify for it or not and regardless of whether they qualify for any other option. The loss mitigation company is selling a product, not helping homeowners save their homes from foreclosure. Most of them are comparable to car salesmen who try to fix consumers’ transportation needs by selling them a car, rather than helping the client examine other options like walking or mass transit, and leaving the final decision up to the purchaser.
-We are aware that the vast majority of lenders will not touch a borrower who has sub-500 credit scores and is actively in foreclosure. That is why we work with the handful of lenders who will consider doing these loans and take a look at the client’s whole financial picture. That is also why we consider refinancing only one option to examine, along with free mitigation services, selling the property, and locating private sources of funding.

“8% is hardly a deal in itself.” [Donna Atwater]
-An 8% mortgage to refinance a home out of foreclosure is a pretty good deal and is comparable to what the borrower could obtain with fair credit and no missed mortgage payments. It is unfortunate, but true, that a 1.25% interest rate is unlikely for a borrower who has not paid their mortgage for months. However, it should be stated again that refinancing is only one of several options that we examine to stop foreclosure.

“ARM loans and these crazy no doc loans is what started the foreclosure epidemic to begin with.” [Donna Atwater]
-This is misleading and negligent, as vast numbers of borrowers have obtained ARM and no-doc loans and have never missed a mortgage payment. As we have stated over and over again, the homeowner needs to begin taking responsibility for their home and their mortgage. While foreclosure is unfortunate and horrible, it is up to the foreclosure victim to research the options to stop foreclosure and then decide on a plan of action. Blaming foreclosure on market conditions or mortgage brokers may be fun and easy, but it will not help solve the immediate problem of helping a homeowner stop foreclosure right now.

“I would just like to say that I think you do an excellent job at fooling the public by using the most commonly used terms in the business such as ‘mitigation specialist’ and tell everyone that those type of people are con artists, while at the same time you change what you call yourself and then peddle the exact same service to the clients you just conned.” [Jennifer Lauria]
-Unfortunately, this is where the negative comments become more personal and entirely unsubstantiated.
-In fact, we provide mitigation services at no charge to any of our clients, so peddling is not an applicable term. Nor is it reasonable to assume that ForeclosureFish cons any client in regards to mitigation services, as we provide them for free. However, we recommend homeowners negotiate with their lenders themselves as an option to stop foreclosure. We don’t think that fooling people into helping themselves could ever be considered fooling them, but rather, fooling them into believing they can qualify for a magical repayment plan that lowers their payments and eliminates their arrears, as many loss mitigation companies do, is fooling the homeowners into believing in an option that is quite foolish for anyone to believe.

“I would like to add that the average person should not be fooled by the play on words that you use to hoodwink unsuspecting homeowners, and that your illeducation in this business is axiomatic.” [Jennifer Lauria]
-If giving away free information and providing mitigation services at no charge is considered “hoodwinking,” then it is inconceivable what term should be used for people who charge homeowners in hardship situations for negotiating with their bank. Perhaps the word economic terrorism fits individuals who practice these acts.

“How does it feel to have spent all that money on a higher education just to turn around and use it like a common crook?” [Jennifer Lauria]
-We are unsure if you are considering us as highly educated professionals with a “higher education” or if you think of us as uneducated crooks with an “illeducation in this business.” It seems your comments are meant to serve your ulterior motive of disparaging the company by simultaneously calling us highly educated criminals and common uneducated criminals. Maintaining a consistent position would only be expected of a person who believes in their position, instead of just applying clichéd labels to a company. In fact, it is impossible to argue with your inconsistent statements, as we are unsure what charge we are responding to.
-However, it feels great to have learned about the foreclosure industry and then to share with homeowners free foreclosure information and perform free services for them to save their homes. It is more likely that common crooks would use their knowledge to charge for the performance of services that, if a homeowner was aware of them, could be done without the mediation of a third party.

“The question is, if you are truly looking out for the homeowner, will you allow this truth to show on your site so they can get REAL help?” [Donna Atwater]
-We hope that anyone in foreclosure who reads our website does enough research on their own to determine what the truth is about their situation and how best they can stop foreclosure, whether through paying for loss mitigation, receiving it for free, or evaluating other options, as well. Again, not every loss mitigation company is bad or good. In fact, even employees in the same company may be considered better or worse than other employees. It is ultimately up to the consumer to decide which company and individual to trust.

We are unsure why these two posters, Jennifer and Donna (who registered for accounts within 1 minute of each other, coincidentally), resorted to unsubstantiated claims and negative comments, instead of offering a valid point of view on their opinion of loss mitigation. Instead of stating their differing positions on the subject and opening a dialogue, they decided to make false statements, and lead homeowners into believing that ForeclosureFish performs the same services as their company. However, if you would like to view their site, after knowing the type of foreclosure help individuals they are, please see here. If you would like to examine their loss mitigation services, please feel free. If you would like to use free loss mitigation services, or do it on your own, please contact us.

If it was not clear from anywhere on the website, or in this post or other blog posts, we would like to state all of the following again:

-ForeclosureFish does not charge for loss mitigation services-

-ForeclosureFish believes that homeowners are nearly always better off doing loss mitigation themselves and paying their mortgage company with the money they would have paid to the loss mitigation company-

-ForeclosureFish helps homeowners stop foreclosure by examining all of the options, instead of selling one particular option-

-ForeclosureFish does not believe that all loss mitigation companies are criminal; however, the past experiences of our clients and recent foreclosure news stories lead us to believe that homeowners need a firm warning against those loss mitigation companies that are unscrupulous-

It is unfortunate that foreclosure season in the US housing market has reduced some people to baseless attacks on other companies that attempt to help homeowners stop foreclosure.

In your plan to stop foreclosure, working out a repayment plan with your lender should be your first and best option. A workout program is designed to give you extra time to pay back the amount of money you are behind, while also making your regular monthly payment.

Relying on just this method of becoming current on your mortgage, however, should not be the only option you are pursuing. Negotiating an agreement with your lender may take several weeks, and you do not want to lose valuable time while waiting for a decision from your lender. Especially if they determine you do not qualify for a repayment plan, you want to work on several other options along with this one. You may also use the specific tactics that we have had success with in delaying your sheriff sale or reducing your payoff in conjunction with other options to save your home.

There are a variety of programs that you may qualify for that can help you get back on track with your mortgage. Some of them may be offered directly by your lender, others are offered by HUD (The US Department of Housing and Urban Development), the FHA (Federal Housing Administration), or VA (Veterans Administration). The most common programs are a forbearance agreement, mortgage modification, partial claim, pre-foreclosure sale, and deed-in-lieu of foreclosure.