California Loss Mitigation Departments: Varying Levels of Cooperation

All over the state, banks and lending institutions are growing their loss mitigation departments in order to process more short sale transactions and facilitate loan modifications and reamortizations. In this day and age, most lenders accept short sale requests and/or offers, even after someone has been issued a Notice of Default. Because of the 2009 foreclosure crisis, mortgage lenders have been suffering from record losses and are now much more willing to work with homeowners to complete short sales.

This means that California homeowners can be assured that even if they get behind on their payments, they are not automatically going to have to default or be foreclosed on. The problem is, different lenders have different levels of tolerance for short sales and requests for loan mods. Most lenders will have their own pre-determined, specific criteria for these transactions. A homeowner must jump through a lot of hoops- conditions, approvals, paperwork, and the like- to get a short sale through.

And there are other factors that determine whether or not a lending institution will accept a request for a short sale, and the level of 'liens' may help make that decision. Junior liens for example (like HOA and HELOC lenders, and those that deal with second mortgages) might be more willing to accept short sales. Tax liens holders, on the other hand, are more likely to reject such requests. And if your lender asked for mortgage insurance on the loan they gave you, they'll also probably need the insurer to be a part of the negotiations as they navigate the short sale. The insurer may be asked to shell out some dough to help cushion the fall of the lender.

Basically, there is a vast network of steps you need to take, people and institutions that needs to be involved, parameters that must be met, and processes that you must slog through to complete a real estate short sale, get a loan modification, or otherwise avoid foreclosure. It's a complex, specialized kind of transaction, and the entire process tends to have a high failure rate, especially among homeowners that choose to forge the path alone, without professional counseling or help. A knowledgeable, experienced professional can really facilitate the process.

A loss mitigation specialist or real estate lawyer who specializes in short sales would be a good person to have on your team during such a time, and homeowners in distress should consider getting professional help.