Loss mitigation option intended to help a borrower keep the home while resolving mortgage delinquency.
A retention option is a loss mitigation option intended to help a borrower keep the home while resolving mortgage delinquency.
Retention option matters because not every distress solution has the same goal. Some options aim to keep the borrower in the property by catching up, deferring, or modifying the loan, while others help the borrower exit.
It also matters because a retention option may still require proof of affordability. The servicer needs to determine whether the borrower can sustain the proposed arrangement.
Borrowers encounter retention options during loss mitigation review. Common retention paths can include repayment plans, forbearance exits, payment deferrals, partial claims, trial period plans, and loan modifications depending on the loan and program.
The term becomes practical when the borrower wants to keep the home and needs to compare the available cure or modification path.
A borrower has recovered from a temporary hardship but cannot pay the full arrearage at once. The servicer reviews whether a payment deferral or loan modification can keep the borrower in the home.
Retention option differs from Non-Retention Option because retention is designed to keep the borrower in the home, while non-retention resolves the loan through exit.
It differs from Reinstatement because reinstatement is one possible way to cure the loan, while retention option is the broader category.
It also differs from Loan Modification because modification is one possible retention option.