Ask for a Loan Modification

• Ask your lender if they are willing to offer a loan modification. The specific requirements for loan modifications will vary according to your mortgage and lender. You are in good position to receive a loan modification if you have the financial ability to pay--just not the ability to pay the full amount.
  
  Your lender will have a formula in place to determine your ability to pay. The formula will be based on your household income, your assets, and your liabilities. In addition to having the ability to pay, you must express a desire to stay in your home.
  
  If you meet your lender's loan modification requirements, your lender will modify your loan so that you have a lower monthly payment and a fixed interest rate. Note that the term of your loan may also be extended. According to mgic.com, it could be extended 40 to 50 years.
  
  

Short Sales

• Another loss mitigation strategy involves the use of a "short sale." Short sales, in essence, are an agreement between you and your lender for your lender to accept less than what is owed. For example, assume you owe $250,000 on a home that was worth $300,000 in 2006. Currently, the home is now worth $225,000, less than what you still owe.
  
  In a short sale, your lender may be willing to accept $225,000 or some other amount and forgive the rest of the debt. To work out a short sale, it is best to be patient and persistent with your lender. Negotiate with your lender and do your best to convince them that a short sale makes more financial sense than a foreclosure. Demonstrate through research and data that the foreclosure would be more costly than accepting a short sale. Work with your lender and stay calm through the proceedings. According to nuwireinvestor.com, this process can be stressful and time-consuming.
  
  

Other Strategies

• Other loss mitigation options include asking for a postponement on a foreclosure or asking for a forbearance on your loan. If you are looking to work with your lender in reaching a loss mitigation agreement, think strongly about hiring an attorney who works in this area of the law. Attorneys have the knowledge and expertise to navigate through the timely and stressful process of loss mitigation.