Servicer offer for a workout option intended to resolve or reduce mortgage delinquency risk.
A loss mitigation offer is a servicer’s offer of a workout option intended to help resolve or reduce mortgage delinquency risk.
A loss mitigation offer matters because it can be the point where a borrower must decide whether to accept a repayment plan, deferral, modification, short sale, or another workout path. The offer may change the payment, move past-due amounts, require trial payments, or set deadlines.
It also matters because not every offer has the same effect. Some options keep the borrower in the home, while others help the borrower exit the property without completing foreclosure.
Borrowers usually receive a loss mitigation offer after submitting a Loss Mitigation Application that the servicer reviews. The offer may follow a waterfall review and may include acceptance deadlines.
The term becomes practical when the borrower must compare the proposed workout with reinstatement, sale, refinance, or other available choices.
A borrower submits a complete loss mitigation application. The servicer reviews the file and offers a trial period plan that could lead to a loan modification if the borrower makes the required payments.
Loss mitigation offer differs from Loss Mitigation because loss mitigation is the overall process, while the offer is a specific proposed outcome.
It differs from Loss Mitigation Denial because a denial means the servicer did not approve a requested or reviewed option.
It also differs from Workout Agreement because the workout agreement is the accepted agreement or arrangement, while the offer is what the borrower may accept or reject.