Foreclosure Alternatives

Postponement of the Sale

In Minnesota, most homeowners facing foreclosure have the legal right to postpone the foreclosure sale. Postponing the foreclosure sale can give the homeowner more time to pursue other options, such as modifying the mortgage or completing a short sale. There are several advantages and disadvantages of postponing the foreclosure sale, and we take the time to fully discuss the implications so that homeowners can make an informed decision.

If the statutory requirements are not followed exactly, a postponement may not be effective and the sale may proceed, so it is important that a qualified attorney review the case, draft the appropriate documents, and serve the appropriate parties. We have the tools and experience to make sure the postponement is properly done.

Short Sale

Homeowners and banks approach a troubled mortgage differently. For the homeowner, the house often represents stability, strength of family, and progress along the path to the American Dream. Thus, a homeowner on verge of foreclosure often feels a sense of security and pride being stripped from the family. Most banks, on the other hand, see only numbers. Banks consider a mortgage, and the house securing that mortgage, as little more than an investment.

When confronted with a troubled mortgage account (whether delinquent or undercollateralized), banks often take the action thought to protect that investment. Sometimes that means foreclosing on the mortgage, and sometimes that means modifying the mortgage so that the homeowner can remain in the home.  Located somewhere between these two extremes. a short sale may also be a viable option.

In most cases when a homeowner owes more on the mortgage than the property is worth, the homeowner is unable to sell the home because there won’t be enough proceeds generated from the sale to satisfy the mortgage on the property. A short sale is essentially a joint effort by the homeowner and the bank to sell the property with the understanding that the proceeds from the sale won’t be enough to satisfy the full amount of the mortgage. In most short sale cases, the bank agrees to forgive the difference. The bank benefits because the bank rids itself of a troubled mortgage and property, and the homeowner benefits because the homeowner gets out from under the mortgage and avoids having a foreclosure on the homeowner’s credit record.

A short sale agreement between the bank and the homeowner can have various terms and conditions. Many of these terms and conditions are negotiable. It is imperative for a homeowner to have qualified legal counsel to ensure that the agreement doesn’t expose the homeowner to continued liability beyond the sale of the home. Our attorneys have been through this process. We have worked with short sale specialists and real estate agents to protect homeowners through every stage of the short sale.

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is just as the name implies: a deed given instead of proceeding with a foreclosure. In this process, the property is deeded to the bank because the homeowner can no longer make payments. The bank typically sells the property in order to retrieve some or all of the balance owed on the mortgage. In many cases, the home homeowner must attempt to sell the home at fair market value for at least three months before a lender will consider taking a deed in lieu of foreclosure. The lender may also refuse to take a deed in lieu of foreclosure if there are other liens on the property, such as a second mortgage, judgments from creditors, or tax liens.

Similar to a short sale arrangement, the deed in lieu of foreclosure process is often accompanied by a written contract containing many terms and conditions. These terms and conditions are negotiable. Our attorneys have worked on both sides of this process, so we know how to structure an agreement that accomplishes the goals of the parties and still protects the homeowner.