What Is Loss Mitigation? A Complete Guide for California Homeowners

The Simple Definition

Loss mitigation is the process of finding a solution to a mortgage delinquency that avoids foreclosure.

Federal law (RESPA) requires servicers to review borrowers for all loss mitigation options before completing a foreclosure. That legal obligation is your leverage.

Common Loss Mitigation Options

Loan Modification

Permanently changing loan terms to make payments affordable. Can lower your interest rate, extend the loan term, or in some cases reduce the principal balance.

Forbearance

A temporary pause or reduction in mortgage payments. Best for homeowners experiencing a short-term hardship.

Repayment Plan

A structured plan to repay missed payments over time while continuing current payments.

Short Sale

Sell the home for less than the balance owed with lender approval — avoids foreclosure but you lose the property.

Deed in Lieu of Foreclosure

You transfer the property voluntarily to the lender in exchange for being released from the mortgage.

How NFDA Navigates Loss Mitigation

NFDA advocates work directly with your servicer, track all deadlines, escalate stalled applications, and ensure your rights under RESPA and California's Homeowner Bill of Rights are protected.

Call us at 949-484-9849 or visit www.thenfda.com.