Alternatives to Foreclosure

Minneapolis, MN:  Life happens. For all sorts of reasons, from divorce, job loss, or a major medical event, people can sometimes get into financial trouble.  The worst thing anyone can do is bury your head in the sand. It isn’t going away, and is usually easier to deal with early on.  Ask friends and relatives for help right away.

Other Alternatives to Foreclosure


A reinstatement is the simplest solution for a foreclosure, but often the most difficult to achieve. The homeowner simply comes up with the money to pay the total amount past due (including late fees) to the lender.  This is a great option early on.


Many believe bankruptcy is a “foreclosure solution,” but this is only true in some states and situations. Entering bankruptcy can be a risky and costly process. Be sure to seek the advice of a qualified bankruptcy attorney when pursuing this as an option.


Refinancing means you will acquire a new loan based on your current credit standing. If you have already missed mortgage payments, those missed payments and now damaged credit scores may make it difficult to get approved for a new mortgage loan

Mortgage Modification

A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. Contact your current lender to discuss a modification.


Also known as a “friendly foreclosure,” a deed-in-lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Contact your lender on how to “give back the keys.”


A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back-payments over a period of time. Typically this involves putting the past due payments to “the back of the loan.”


A short-sale is exactly what the name implies.  You put the home up for sale, and find a buyer.  Unfortunately, the sales prices is less than you owe.  You will then negotiate with the bank to accept the sales prices as payment in full. While still damaging to your credit, it is better because you usually are able to walk away free…  with the bank never coming after you for any money they lost. On a true foreclosure, they can usually come after you later on for any loss.

Rent the Property

This option does not require lender approval, but does require the homeowner’s ability to rent the house for enough money to cover the monthly mortgage payment. Being a landlord isn’t overly difficult, but isn’t for everyone.

Service members Civil Relief Act

If a member of the military experiences financial distress due to deployment-and their debt was entered into prior to deployment-he or she may qualify for relief under the Service members Civil Relief Act.


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