With the slow rise of interest rates, many homeowners and debt holders are feeling the pinch of higher monthly loan payments. The rise in interest rates means that inevitably there will be more people falling behind on payments, and unfortunately an increase in missed payments and foreclosures. This is where Loss Mitigation Specialists come in, helping both the debtor and creditor come to a resolution. Since these roles will become more and more important in the new year, as debt takes center stage in America, TalentWoo takes its followers on a brief journey down the road of loss mitigation.

First lets start with how loans originate. Loan origination involves creating and issuing new mortgages, which is an intricate process that involves mortgage lenders or brokers. According to Bankrate.com the top loan servicers in the US are: RocketMortgage; United Shore Financial; and LoanDepot.

Loan servicing, on the other hand, involves managing those mortgages after they have been issued. Servicing companies -including large banks like JP Morgan, US Bank, and Mr.Cooper – are responsible for collecting payments from the borrowers, managing the escrow accounts, and ensuring that the loans remain in good standing. With Americans owing $11.92 trillion on 83.4 million mortgages (i.e. an average of $142,927 per person with a mortgage on their credit report), mortgages represent 70.6% of consumer debt in the U.S. That’s a lot of loans to service when things start going sideways!

Enter the Loss Mitigation Specialist!

Loss mitigation specialists play an especially important role in the lending industry because they help individuals and businesses avoid foreclosure or bankruptcy. These professionals work with their assigned clients to evaluate their financial situation, determine the best course of action, and negotiate with creditors to find solutions that will allow them to keep their homes or businesses.

The primary responsibility of a loss mitigation specialist is to help clients avoid defaulting on their loans by assessing their financial situation and identifying potential solutions. This involves reviewing financial documents, such as income statements, tax returns, and credit reports, to determine the client’s ability to pay back the loan. They may also conduct site visits or interviews with clients to gather additional information about their situation. This is why strong customer service experience, negotiation, and conflict resolution skills are so important to the role.

Once a specialist has assessed the client’s financial situation, they will work with them to develop a plan to avoid foreclosure or bankruptcy. This may involve negotiating with creditors to modify the terms of the loan, such as lowering the interest rate or extending the repayment period. They may also work with the client to develop a budget or provide financial counseling to help them better manage their finances.

In addition to working with clients, loss mitigation specialists may also be responsible for maintaining records and documentation related to their cases. This may include creating and updating spreadsheets or databases to track client progress and communicating with creditors and other stakeholders.

To become a loss mitigation specialist, individuals typically need to have a bachelor’s degree in a related field, such as finance or business. Some employers may also require additional certifications or training in loss mitigation or foreclosure prevention.

TalentWoo has hired over 150 mortgage servicing professionals in the past year, and our real estate recruiters excel at helping both lenders and loan servicing companies attract and hire great talent. Read our case studies to find out more about what we can do for your company today.

Below are additional resources and links about Loss Mitigation:

  1. The American Bankers Association (ABA) offers a compliance training course that covers the conditions for a loss mitigation application receipt and obligations of forbearance and repayment plans, and the requirements for providing a notice of complete application and denial circumstances.
  2. The Department of Labor’s Occupational Outlook Handbook provides information about the job outlook, median pay, and job duties of loss mitigation specialists. You can find this information on their website: https://www.bls.gov/ooh/business-and-financial/loan-officers.htm#tab-2
  3. The Mortgage Bankers Association (MBA) released a white paper on the future of Loss Mitigation
  4. Indeed.com and Glassdoor.com are two job search websites where you can find job postings for Loss Mitigation Specialist positions. You can also read reviews of companies that hire loss mitigation specialists on Glassdoor.com.
  5. The Consumer Financial Protection Bureau (CFPB) has information on their website about the loss mitigation process and how to work with your lender to avoid foreclosure.