PreForeclosure Marketing: Using loss mitigation Services to Earn Additional Income

Are you using loss mitigation to help your preforeclosure homeowners stop foreclosure?  As we discussed in our last article, if you aren’t, you should consider adding this service to your offerings as a real estate investor working with homeowners facing foreclosure. 

To recap, loss mitigation is a method that allows homeowners to keep their homes and avoid foreclosure by helping homeowners facing foreclosure to get their loan back into good standing.  The loss mitigation department within all lenders is set up to facilitate a “workout” agreement (often also called a “forbearance” or “loan modification”) between the lender and the borrower, who has fallen behind on payments.  Their goal is to try and come up with a workable solution or repayment plan for the borrower so that they can get the loan back into good standing.

Using Loss Mitigation as a tool to help a homeowner who is behind on their mortgage payment keep their home is very effective.  Many homeowners don’t have the ability to follow up effectively with their lender, nor do they have contacts within that department to get their workout agreement approved.  A professional loss mitigator has a much better chance of getting a deal worked out, and is a valuable addition to your PreForeclosure business.

We outsource all of our Loss Mitigation work.  We have great contacts in the industry that are well connected at many of the big lenders.  This means that when they get a file on a homeowner, and for example the lender is Countrywide, they have a nice Rolodex of contacts at Countrywide whom they can call directly.

These outsourced partners can make more headway with a file at a lender in a single day than most homeowners can make in a month.  This is simply because they have the contacts, and know how to get things closed, and what will and won’t work with the loss mitigation departments.

Think about it from the perspective of the Loss Mitigator who works at the bank: do you believe that they would rather work on a file submitted by a professional, who has saved many homes in the past?  Or would they rather work on a file from Mr. & Mrs. Smith, who may or may be able to get the documentation and follow through on the plan that they say they will?

Remember that these Loss Mitigators at the banks are paid bonuses on the number of files that they can get out of foreclosure status and back into a workout plan.  Loss Mitigators are motivated to get loans out of foreclosure status, when the numbers make sense.  To ensure the highest percentage of successfully approved files, I recommend working with a professional Loss Mitigation company.

If you’re not offering your PreForeclosure prospects the opportunity to keep their homes, then you’re doing them a disservice.  And if you are helping homeowners keep their homes, you should be getting rewarded financially, whether you do the Loss Mitigation work yourself, or outsource it to reliable third party.

All homeowners should be given the chance to save their home when facing a foreclosure.  Just remember that as an investor, if you’re spending money on marketing to PreForeclosures, you should earn an income when you help that homeowner keep their home.