Navigating the waters – short sale, foreclosure, postponement, and other options

22 Jun

Many Minnesota homeowners are facing mortgage default, mortgage foreclosure, and possible short sale scenarios.  Although the term “short sale” is used regularly in the media and at dinner tables throughout the country, few homeowners facing financial distress truly understand their options.  Although short sales are done regularly, and successfully, they do not always come with a satisfaction of debt.  Some homeowners, after selling their home in a short sale transaction, will still be required to repay some or all of the remaining debt, or may even be sued for outstanding debt if the debt had not been deemed satisfied.

Meanwhile, when a foreclosure has begun, some homeowners are not in a position to redeem the property (by paying off the entire debt balance and accrued/interest and costs in the redemption period), but they may be able to reinstate the mortgage (paying off the past due amount) if they have the foreclosure postponed for five months and they regain control of their finances.  Ultimately, each circumstance and the needs and objectives of each homeowner will vary.  Whether it is best to attempt a mortgage modification, payment deferment, short sale, deed in lieu of foreclosure, foreclosure postponement, redemption, or simply ride out the foreclosure is an issue that must be explored with some understanding of the homeowner/borrower’s history, financial outlook, and goals.

It is important for homeowners facing such decisions to seek appropriate advice from their trusted advisers, which might include an attorney, accountant/CPA, financial planner, real estate agent, or other professional.  Some resources can also be found online, including the government’s website,


This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck. Brad is the chair of the firm’s Transactional Group, and his practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law, and Wind Energy Law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals.

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