Servicer proposal for a specific retention or property-exit option after reviewing a distressed mortgage.
A loss mitigation offer is a servicer’s written or documented proposal for a specific mortgage workout or property-exit option.
A loss mitigation offer matters because it turns a general request for help into a proposed course of action. The offer may require catch-up payments, defer arrears, change loan terms, establish a trial period, or set conditions for a short sale or deed in lieu.
Not every offer has the same goal or long-term cost. A lower immediate payment may result from term extension, arrearage capitalization, interest-rate treatment, principal deferral, or a combination. A non-retention offer can address property exit but may contain sale, lien, title, relocation, or deficiency conditions.
The response deadline matters. Under the federal baseline for covered complete applications received more than 37 days before a foreclosure sale, the decision notice states the time to accept or reject an offer. When receipt is 90 days or more before sale, the servicer generally cannot require a response earlier than 14 days after providing the offer. When receipt is less than 90 but more than 37 days before sale, the baseline is generally at least seven days. Exceptions and other program rules can apply.
Borrowers usually receive a loss mitigation offer after submitting a Loss Mitigation Application and moving through a Waterfall Review. For a covered complete application received more than 37 days before sale, the servicer generally evaluates all options available to the borrower and provides a written determination within 30 days of receipt.
A servicer can also offer certain short-term forbearance or repayment arrangements based on an incomplete application. That limited offer does not necessarily mean the borrower was evaluated for every available long-term option.
| Offer term | Borrower question |
|---|---|
| New payment | Is it temporary or permanent, and when does it begin? |
| Past-due amount | Is it repaid, capitalized, deferred, partially claimed, or still due? |
| Trial requirement | What payments and documents are needed before a permanent agreement? |
| Interest and term | Do the rate, maturity date, or total repayment period change? |
| Property outcome | Does the option retain the home or require sale or transfer? |
| Acceptance method | Is a signature, payment, document package, or other action required? |
| Deadline | What exact date and time controls acceptance or appeal? |
The borrower should compare the offer with any simultaneous denials and read how foreclosure activity is treated during acceptance and performance.
A borrower submits a complete application 100 days before a scheduled sale. The servicer denies a repayment plan but offers a three-payment trial plan for a modification. The letter states the proposed trial payment, due dates, documents still required for permanent modification, the 14-day response window, and appeal rights for the denied modification alternatives. Making one informal payment without satisfying the stated acceptance terms would not necessarily accept the offer.
A loss mitigation offer differs from Loss Mitigation because loss mitigation is the overall process, while the offer is a specific proposed outcome.
It differs from Loss Mitigation Denial because a denial means the servicer did not approve a requested or reviewed option.
It also differs from a Workout Agreement because the agreement records an accepted arrangement. An offer can expire or be rejected before an agreement is formed.
It differs from a Trial Period Plan because a trial plan is one type of offer and performance stage, not the general category of all loss mitigation outcomes.