Loss mitigation is the process by which banks try to minimize their losses when it comes to non-performing investments, and in recent times, especially with those associated with mortgages and mortgage backed securities. This is the process banks use to negotiate a loan modification, repayment plan, restructure a home loan, loan forbearance, deed In lieu of foreclosure, loan repayment plans, short sales, partial claim or cash for keys. All of these practices fall under loss mitigation services.