Foreclosure is a daunting reality for many homeowners, but what if they knew there were options?
In a recent episode of Foreclosure Chronicles, Julia Iden, a veteran in the mortgage and loss mitigation industry, shared invaluable insights on how homeowners facing financial distress can navigate the foreclosure process, seek alternatives, and protect their future credit. (click here to listen)
With over 30 years of experience, Julia has worked on the front lines of foreclosure prevention, serving as an auditor, negotiator, and corporate default manager. Her message is clear: hardship can happen to anyone, regardless of income or social standing—and too often, homeowners simply don’t know where to turn for help.
Why So Many Homeowners Struggle to Find Foreclosure Solutions
One of the biggest problems, Julia explained, is that most real estate professionals—agents, attorneys, and even loan officers—aren’t trained in foreclosure prevention. Homeowners assume that the professionals they trust will have answers, but in reality, many don’t fully understand the loss mitigation process.
As a result, struggling homeowners often receive little to no guidance until it’s too late. Some even fall into despair, believing foreclosure is inevitable. Julia has personally witnessed tragic cases where homeowners, feeling hopeless, took their own lives before discovering the options available to them.
Understanding the Role of Loss Mitigation
Julia emphasized that not all departments within a mortgage company operate with the same goals. Most homeowners unknowingly speak to collections departments first, which are only focused on recovering payments—not on helping borrowers find solutions.
She broke down how homeowners can identify when they’re in the wrong department:
- Collections agents are incentivized to push borrowers to pay in full or move quickly to foreclosure.
- Loss mitigation specialists are the ones who can actually negotiate a loan modification, short sale, or other workout plans.
- Getting to the right person is critical.
How to Avoid Getting Stuck in Collections
For homeowners seeking help, Julia provided a step-by-step approach to ensure they connect with loss mitigation rather than getting trapped in collections:
- Use an old mortgage statement. Mortgage companies change the customer service number once an account becomes delinquent. Homeowners should use a statement from when they were still current on their loan.
- Never enter a loan number into the automated system. This prevents the system from automatically routing them to collections.
- Ask for the loss mitigation department directly. Before giving a loan number, request the direct phone number for loss mitigation.
- Speak directly to decision-makers. If denied assistance, homeowners should ask to escalate their case to someone with the authority to override standard guidelines.
The Importance of a Hardship Letter
Julia revealed that one of the most powerful tools a homeowner has in foreclosure prevention is their hardship letter. Mortgage companies use this document to determine whether they will offer a loan modification, short sale approval, or another alternative to foreclosure.
A proper hardship letter should include:
- What happened? The specific event that caused financial distress (job loss, medical emergency, death in the family, etc.).
- What steps were taken to fix it? Evidence of attempts to recover financially (taking on a second job, selling assets, withdrawing retirement funds).
- What is the desired outcome? A clear statement of whether the homeowner wants to stay in the home or exit the property.
Unlike some advice circulating in the industry, Julia does not recommend keeping the hardship letter short. Instead, she advises homeowners to fully detail their situation, even if it takes several pages. Loss mitigation specialists need to understand the full story before making a decision.
Real-Life Examples of Foreclosure Prevention
Throughout the podcast, Julia shared compelling stories of homeowners in distress—including a family whose daughter passed away in a tragic accident, leaving them unable to make mortgage payments. By properly documenting their hardship, they were able to work out a solution with their lender and avoid foreclosure.
Another case involved a homeowner who had lost their job unexpectedly. At first, their mortgage servicer told them they had no options, and collections calls started almost immediately. After learning about loss mitigation, they submitted a comprehensive hardship letter detailing their job loss, the temporary work they had taken to cover expenses, and their willingness to negotiate. Because of their
persistence and the detailed documentation they provided, the bank ultimately granted a loan modification that allowed them to keep their home.
One particularly eye-opening case Julia discussed was a family with a severely ill child. Facing mounting medical bills, they had no way to keep up with their mortgage payments. The mortgage insurance company, recognizing the situation, stepped in to advance three months’ worth of mortgage payments, preventing the family from falling into foreclosure. This intervention allowed them to focus on their child’s remaining time without the stress of losing their home.
In contrast, Julia described cases where homeowners didn’t take action in time. Some ignored foreclosure notices, believing the situation would resolve itself, only to find themselves locked out of their homes when the foreclosure sale was completed. The key takeaway? Act early and work with loss mitigation—not collections—to explore all available options.
Why Real Estate Professionals Must Get Educated on Foreclosure Alternatives
Julia’s experience has shown that foreclosure solutions are severely under-taught in the real estate industry. Many real estate agents and attorneys unknowingly send clients away when a deal seems impossible, never realizing that alternatives exist.
For those looking to deepen their knowledge, Julia provides training for real estate professionals and attorneys so they can better guide homeowners in distress.
To help us here at MAREI, she is teaching a Master Class on how it all works on Saturday, April 12th. Get all the details and get signed up on the MAREI Calendar.
Julia Iden
The insider who used to train bank negotiators how to pick which short sales to approve and now trains real estate pros to negotiate them. She knows what works, what kills deals, and how to get your file to the top of the stack.
