These loss mitigation methods are meant to decrease the loss that the lender will see on the property while increasing the chances of the borrower being able to prevent foreclosure through alternative methods of raising the capital to fund the repayment of the home loan.

Cash for keys negotiations are a type of loss mitigation that includes

There are several types of loss mitigation that are available as alternatives to foreclosure, these include;

· Loan modification

· Short Sale

· Short Refinance

· Special Forbearance

· Cash for Keys Negotiation

Loan modification occurs when the homeowner and the lender come to new terms for the loan to accommodate both parties. There are many options which could be completed, such as; reducing the interest rate of the loan, extending the principal, forgiving defaulted amounts and fees. There are many instances when a variety of these methods are used in combination with each other to create terms that are ideal for both the lender and borrower.

A short sale occurs before a foreclosure. The short sale allows the homeowner to raise the funds to repay the amount that owes on the mortgage. The lender reduces the mortgage amount to allow the homeowner to sell the home. Compared to a short sale, short financing also includes a reduced principal to the mortgage which allows the homeowner to refinance with another company. Unfortunately, in most cases the homeowner is left without options unless the lender can accommodate the homeowner and reduce the principal of the loan.

A special forbearance is a type of loss mitigation that includes fewer, or no repayment until the borrower is able to afford the payments. This can occur in between a loan modification and is helpful for those homeowners that are in the process of refinancing to ensure that the home is affordable.

How do you know which type of loss mitigation is right for your personal financial situation? Every situation is different; a loss mitigation specialist can assist in determining which technique will demonstrate the best outcome for everyone involved.

The main benefit to loss mitigation comes in favor of the homeowner as it can often prevent foreclosure proceedings from occurring. The lender also sees a benefit, as they can avoid the expensive and lengthy costs of foreclosure proceedings while reducing the loss which is taken on the property and the loan.