While there is much said these days about foreclosure there is little said about avoiding foreclosure. Part of the reason is that the media has a tendency to center on the worst case scenarios associated with a problem. This is unfortunate because it leads to a situation where people don't receive the help that is available to them because they don't know about all the options available.
Case in point there is very little discussed about the value of a loss mitigator, which is something that can often help keep a foreclosure proceeding from occurring. Now, this is not a form of debt amnesty; but it may involve refinancing the loan at lower interest and at a longer term, or any number of options that will continue payments while staving off foreclosure.
Essentially, loss mitigation involves bringing in a third party to negotiate a repayment plan to help the homeowner avoid a foreclosure. Now, this is not to say that loss mitigation will free a person from their debts or that the lending agent will be completely agreeable during the mitigation, but it does provide at least a possible way out of a foreclosure and that can save the lender and the borrower a great many headaches. Therein lies the key to understanding why a lender may be willing to work out a deal with the person who might be foreclosed upon: there are so many costs associated with foreclosing on a property (legal, marketing, etc) that the costs of foreclosure may exceed whatever “losses” they may absorb in mitigation. As such, loss mitigation can remain a viable option under certain circumstances.