This week, we will attempt to answer the following question: “What is loss mitigation, and how can it help me?”While most mortgage lenders and servicers often have a department that operates under the name loss mitigation, this term really refers to a process and a goal that these staff members work toward. When homeowners default on their mortgages, lenders almost invariably suffer financial losses. As much as they would like to prevent these losses from occurring at all, the reality of our financial world is that household finances can change and make a previously reasonable mortgage unmanageable.

The loss mitigation process is dedicated to minimizing the cost to the lender when this happens. The good news for the homeowner is that foreclosure is often the most costly option for everyone — and therefore generally viewed by the lender as a last resort. Staff in these departments are specially trained to, within the strict guidelines of mortgage insurers and investors, find ways to help the homeowner avoid foreclosure.

Unfortunately, keeping a home is not always possible. In that case, these departments can work with a borrower to help them sell the home or surrender it. If you are seeking ways to avoid foreclosure, consider loss mitigation staff members your partner in this effort. Remember, though, that the foreclosure crisis has raised the demands on these departments exponentially. Many staff are new to their positions and struggling to keep up with rapidly changing policies amid a flood of calls for assistance. If you are unable to get satisfactory assistance from your lender yourself, contact a HUD-approved housing counseling agency for help.

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Every week, Amy Case, home ownership coordinator with the Grand Junction Housing Authority, will offer a foreclosure prevention tip of the week. Case is also a nationally certified foreclosure intervention and default counselor. For questions or information, reach her at 245-0388, ext. 214.