Stage 3 of 4 · Ways Out Before the Auction
Loss Mitigation
The servicer's set of alternatives to foreclosure, offered to a borrower who asks for help.
- In plain English
- Loss mitigation is the umbrella term for every option that is not an auction. Forbearance, modification, short sale and deed in lieu all sit under it, and a servicer is generally required to review a complete application before selling.
- Example
- A borrower submits income documents and a hardship letter, and the sale is paused while the file is reviewed.
- Why it matters
- Applying is what stops the clock, and a borrower who never applies is choosing the auction by default.
- Remember it as
- Ask, and the calendar often waits.
Where it lands in the timeline
Stage 3: Ways Out Before the Auction
The auction is the default ending, not the only one, and every exit in this phase narrows a little more each week the calendar keeps turning.