In fact, the run up prior to the near collapse of the entire financial system shows Loss Mitigation was almost nonexistent.
Loss Mitigation was only needed for extreme cases due to the homeowners ability to repeatedly refinance and avoid defaulting.
Large numbers of lenders went out of business and the rest were forced to eliminate all of the loan programs that were most prone to foreclosure.
Lenders sold pools of these mortgage loans to investment firms who packaged and resold them in the market in the form of bond issues.
In fact, credit default swaps were created during this time and didn't exist prior to the housing boom.
The agencies rated subprime mortgage pools as "investment grade" which opened up an almost unlimited supply of large investors (mutual funds, pension funds and even countries)to purchase these bond issues (The investment grade rating duped money managers into thinking the bonds were less risky than they actually were).
This resulted in millions of people to be unqualified to refinance out of their risky subprime, adjustable rate and negative amortization loans.
Based on RealtyTrac data, since December 2007 and through June 2010 there have been a total of 2.36 million U.S. properties repossessed by lenders through foreclosure (REO).
Home values were at highly inflated levels prior to this due to historically low interest rates[8] and the steady decline of credit requirements for the homeowner to qualify for a mortgage.
Many homeowners found themselves with negative equity meaning the mortgage balance was considerably higher than the market value of the home also known as being "underwater".