Why would my Lender want to allow a Mitigation of Term to help me?
The reason is simple; a Mitigation of Terms often has a better return on investment to the lender than a foreclosure. The average savings a lender sees from a short sale property compared with a foreclosure property is substantial. Not only does the lender receive this savings, they are also paid on the loan earlier than in the foreclosure process. This allows them to collect and cash-out earlier than they would in a foreclosure. Plus, lenders spend a great deal of money with attorneys to complete the foreclosure process. Lenders created the Mitigation of Terms process as a foreclosure alternative for those reasons.