Short Sales and Foreclosures

Foreclosures are hitting record levels and more are forecasted over the next year or two. The average foreclosure process costs the lender about $59,000. More and more lenders are becoming willing to "short sale" loans - a process whereby they cut their loss and accept an amount that is less than they are owed by the borrower.

What happens when you owe more in mortgages than your property is worth, and you must sell?

• Your first option is to bring enough money to closing to pay off the mortgages, closing costs, and commissions.
• Your second option is to hire an experienced realtor that will negotiate a short sale on your behalf.
• The third (not recommended) option is to let the property go into foreclosure.

What can we do for you?

• Negotiate away or minimize promissory notes
• Advise you on managing your property throughout the process
• Have the bank pay your closing costs and our commission
• Avoid foreclosure

If you are going to be unable to continue making payments on your mortgage, call us immediately at 763-631-0966 or email us at eldonjohnson@remax.net The sooner we begin negotiating with your lender, the better it is for you. We can even negotiate on your behalf before you have missed a payment!

If you delay, your options will decrease. Some lenders will not negotiate a short sale after the sheriffs (foreclosure) sale has occurred. Every month that goes by is resulting in further damage to your credit report. Also, as the foreclosure proceeds, your lender is incurring more costs and it is more difficult to reach a settlement.

FORECLOSURE PROCESS IN MINNESOTA

STEP 1: Default on Mortgage Payment
Homeowner misses 1-3 payments (If overdue payments are not made, foreclosure begins)

STEP 2: Notice of Foreclosure
Mortgage is 3 months delinquent
Servicer notifies insurer, investor, and local attorney

STEP 3: Publication of Notice of Foreclosure
Notice published in Saint Paul Legal Ledger for six consecutive weeks
Homeowner served with Notice of Foreclosure

STEP 4: Sheriff's Sale
Servicer's local attorney submits bid in amount of indebtedness
Mortgage is extinguished
Home title remains with homeowner

STEP 5: Redemption Period (Six Months*)
Homeowner may continue to live in house
Homeowner may repay debt through sale of home or refinance

STEP 6: Foreclosure Completed
Title goes to lender/servicer/investor
Former homeowner vacates the house

* If the property is vacant, the attorney for the servicer can petition the court to shorten the redemption period to five weeks, usually. On the other hand, the redemption period can be 12 months when older mortgages are involved or the property is larger than 10 acres.

"Avoid foreclosure scams! Unfortunately, while many companies and individuals are trying to help people facing foreclosure there are a growing number of scams out there. Don't forget to call your lender first when you start having trouble paying your mortgage. The government does provide free housing counseling to individuals in trouble.
Please visit http://www.hud.gov/news/fhasecure.cfm to find out more information.