Loss Mitigation Services
Homeowners who are delinquent on their mortgage payments often seek loss mitigation services to develop financially sustainable solutions to avoid foreclosure and maintain ownership of their properties. For the lender, loss mitigation aims to reduce losses as foreclosing on a property can potentially create massive financial burdens. Negotiating new mortgage terms can be difficult without the right expertise or decision-making skills.
Thankfully, Del Toro Loan Servicing can help lenders and borrowers with loss mitigation services. Our experienced team can work through negotiations and ensure that new terms are mutually beneficial to both the borrower and lender.
Del Toro Loss Mitigation Services
Del Toro offers several loss mitigation services to fit your needs.
Review and Update Terms for Lender Prepared Modification
Loan modification services are a common means of adjusting the terms of a loan when a borrower is unable to make payments in accordance with the initial terms. Lender-prepared modifications are more cost-effective than completely starting fresh with a new loan, and Del Toro can review and update modified terms to ensure that they are compliant and reasonable.
Negotiate and Prepare Modification/Extension Agreement
If you want to go with a loan modification but have trouble knowing where to start, our team can guide you through the process. We can negotiate terms between lender and borrower and prepare a final modification or extension agreement.
Develop Loss Mitigation Scenarios
Our team understands that there is no one-size-fits-all solution for loss mitigation, which is why we can develop several scenarios and options, allowing you to choose the strategy that best works for both the lender and borrower.
Loss Mitigation Scenarios
Loss mitigation can come in all shapes and sizes and be customized to fit your specific needs. The three most common loss mitigation scenarios are deferred payment programs, short sale or pay, and forbearance.
Deferred Payment Programs
Deferred payment programs allow for a complete or partial postponement of payments for borrowers for a set period of time. However, you are still ultimately required to pay the loan amount. Depending on the lender and the new terms of the loan, unpaid interest during the deferment period may either be waived or added to the loan principal. Deferments are often granted in conjunction with another loss mitigation option. For example, if the terms are modified for a new loan payment amount, the lender may allow a period of deferment before initiating the new amount.
A short sale occurs when a homeowner sells their property for less than the debt balance that still remains on their mortgage. Despite the homeowner coming up short on the sale, the lender may still agree to accept the sale amount and release the lien on the property. This usually occurs when there has been a significant drop in the home’s market value and the homeowner is already unable to make payments. With short sale services, some lenders may require that the homeowner repay the deficiency through a payment plan or down payment, though some lenders may waive the deficiency entirely.
Similarly, short payoffs allow a homeowner to pay less than the full mortgage balance as payment in full for the entire loan. Short pays are more common when the homeowner can still make mortgage payments but wants to quickly get rid of a property.
In forbearance, the lender agrees to lower the borrower’s mortgage payments or suspend payments entirely for a certain period of time. During the forbearance period, the lender agrees to not initiate foreclosure on the property. A mortgage forbearance agreement should be considered a short-term solution as it is mainly designed for borrowers who are experiencing temporary financial hardships. There is a general understanding that the homeowner will eventually resume their full payment schedule at the end of forbearance and pay additional amounts to become current on their payments. This can include paying interest, principal, taxes, and insurance. Property owners with more significant, long-term financial problems will usually have to seek other forms of relief in lieu of or along with their forbearance agreements.
What is Loss Mitigation?
Borrowers are sometimes unable to make payments in accordance with the terms agreed upon with their lender. Homeowners who become delinquent on their loans are liable for foreclosure, which essentially means that the lender can take possession of a homeowner’s property. The lender can then sell the home and attempt to recoup the losses. Foreclosure generally is not ideal for either the borrower or the lender. For the borrower, it means losing their own home. For the lender, foreclosing on a property can become a financial burden. There is no assurance that they will make back the money they loaned by selling the property.
Loss mitigation can prevent foreclosure when a buyer has become delinquent on their loans. Loss mitigation usually involves a third party to negotiate new terms or develop scenarios and strategies that can help a borrower make payments and prevent the lender from losing money. The main goal of loss mitigation is to create a financial stable solution for the borrower and the lender, ultimately preventing foreclosure and reducing losses for all parties involved.
Why Choose Del Toro Loan Servicing?
When you work with Del Toro Loan Servicing, you know you are working with experienced individuals who care. Our team offers expert services for private lending professionals. From loss mitigation to loan processing, our services are all tailored to fit the needs of each individual case, ensuring that you have a solution that delivers the best results. We are dedicated to doing things the right way, not the easy or quick way, and we continue to work hard to maintain our reputation and partner with business owners and organizations that have the same mindset.
Our team and our vast network of partners offer experience in all aspects of our industry, so if we can’t help you, we can connect you with someone who absolutely can. We are passionate about spreading our knowledge and learning more along the way. If you want to learn more or need our loss mitigation services immediately, please contact us today.