Use this concise list of terms to help you wade through the bog of loss mitigation and loan restructuring.

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Foreclosure: The legal proceeding by which a court order is issued for a mortgagor’s right of redemption to be terminated. Foreclosure is a last resort, and when utilized, should be executed quickly to minimize the amount of loss to the mortgagee and mortgagor.

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Loan Modification: A permanent change in the terms of a loan, allowing the mortgagor to pay off their debt. Usually results in a payment that the mortgagor can afford to pay, thus preventing foreclosure or default.

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Partial Claim: the act of a mortgagee advancing funds on behalf of a mortgagor in whichever amount is necessary to reinstate a loan that is delinquent.

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Pre-foreclosure Sale: a program that allows a defaulted mortgagor to sell his or her home and use the proceeds of said sale to fulfill the mortgage debt, even if the proceeds are less than the amount owed.

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Special Forbearance: a repayment agreement that is formally written and signed by a mortgagee and mortgagor, usually containing a plan to reinstate an asset that is overdue and unpaid.

How can you prevent foreclosure on your home or business? Sometimes it seems hopelessly unmanageable, but there is an answer: a Loan Modification Plan.  This is a simple way to re-negotiate with your lender to try to catch up on your payments by folding past due charges (including possibly escrow or interest) into the balance of unpaid principle.  Or, sometimes a deal can be worked out in which you make payments only on the interest, not paying back the principle.
Or, if you still can’t match payments at this speed, it’s possible to work out a deal with your lender to either extend the timeframe on your loan or reduce the total amount you need to pay. Most lenders would rather reduce the amount they are paid than have you default, and keeping this in mind, it often is much easier than you’d imagine to re-negotiate.
The entire process of a Loan Modification can change around the mortgage you have now, letting you have a clean slate in managing your beautiful home.  But every deal is different for every person, and it’s important to keep your plans flexible depending on what your lender is willing to do for you.