Shortly after the recession hit and it came to light that mortgage companies had taken advantage of the American public by providing them mortgages that they could not afford and that destined them to foreclosure. The lenders danced quickly to offer the appearance that they wanted to “fix” what was broken. A few years later the news disclosed that in their haste to foreclose on properties, the mortgage companies had taken a few illegal shortcuts to simplify the foreclosure process. By this time those lenders and their contractors became highly motivated to garner some positive press, and touted what they thought was the perfect solution – “loss mitigation departments.”
It was never too clear to me exactly whose loss they sought to mitigate, but let’s give them the benefit of the doubt, and assume that they sought to help people avoid foreclosure. I can’t say whether they had loss-mitigation departments before the economic meltdown, but after, they sure bragged that these departments were the solution to debtors who wanted to try to save their homes from foreclosure.
I have had too many dealings with these departments, and my conclusions are as follows:
The departments had little motivation to succeed in stopping foreclosures.
They were staffed by unqualified insufficiently trained, phone consultants.
The consultants worked from a flow chart that tried to anticipate questions, and any questions not on that flow chart of answers, were not answered.
They tried desperately not to put you through to a supervisor.
They were unprofessional, lost documents, had inadequate databases and one consultant had no idea what the other consultant was doing.
It soon became clear to me that the golden rule of dealing with loss mitigation departments was to find a consultant that seemed to know what she was doing, and to refuse to talk to anyone else. Get her phone extension, her work schedule, and ask what she has posted as notes in your case. Often-times you might have to go through several consultants before you find a good one, but when you do, she is golden, the best hope you have to working out a deal to keep your house. Treat her with respect, patience, and ask questions – take notes of conversations, dates, and times.
Keep in mind the positions of those involved: you have had your home for years, have been making regular payments until recently, and no one wants your home more than you; the mortgage company does not want a home owned by a person who can’t make payments because the home has probably fallen into disrepair recently, the company has too many homes they can’t sell now (and has for years), and they know that no one wants your home more than you. To keep the home you will have to prove that you can make your payments if given another chance by changing the terms of the mortgage. When you apply to keep your house be prepared for your papers to be lost, for you to send them in over and over again, and for each new presentation you will have to update your application with new income and expense information.
In short, you are in a weak bargaining position, because the mortgage company has the legal right to foreclose, so cooperate fully and graciously with your consultant, expect the worst, but don’t give up and you have a chance to avoid foreclosure, and bankruptcy.