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Loss Mitigation Options for Families Facing Foreclosure

Loss Mitigation Options for Families Facing Foreclosure

Federal law requires mortgage companies to offer loss mitigation options to homeowners who are facing foreclosure. Loss mitigation options include:

  • Loan Modification – The lender and borrower agree to extend the life of the loan for a reduction in interest.
  • Deed in Lieu – The borrower offers collateral in exchange for a release from the mortgage.
  • Pre-foreclosure Sale – The borrower sells the property and uses the money to pay off the mortgage.
  • Short Sale – The lender accepts a payoff less than the mortgage is worth. This only applies if the mortgage is more than the value of the property.
  • Cash for Keys Deal – The lender pays the family to leave in order to avoid the cost of eviction.
  • Forbearance – The lender accepts reduced or no payments for a short time in exchange for a later repayment.
  • Partial Claim – The lender advances the fees necessary to bring the mortgage current to the borrower under the condition that they are paid back at a later date.


Which options are available depend on the mortgage servicer and the circumstances surrounding the loss mitigation application. The mortgage servicer will be able to present you with information regarding loss mitigation and what is required to file an application. After submitting an application for loss mitigation:

  • Your servicer must respond to loss mitigation application in five business days with the application status:
    • Either complete or incomplete.
    • If incomplete, the servicer must state what is required to complete the application.
  • Your servicer must provide you with an evaluation or complete list of options within thirty business days of receiving the application.
  • If you are denied, you must be provided with an opportunity to appeal.


Once you submit a loss mitigation application, before responding to your request the mortgage servicer cannot:

  • File a foreclosure lawsuit.
  • Move forward with the sale of a property.


This is known as dual tracking and it is illegal. Doucet & Associates deals with banks and mortgage servicers on a regular basis. If you are having trouble getting a loan modification processed, or if you would like assistance in filing one calls us at (614)-944-5219.


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