Behind on your mortgage? Your options in Minnesota

1. Open the mail and call your servicer

The company you send payments to (your servicer) has to work with you on options, but only if you ask. Call, explain what happened (job loss, illness, divorce, a payment jump) and ask what loss mitigation options your loan has. Write down who you spoke with and when, and keep copies of everything you send.

Under federal mortgage servicing rules, a servicer generally can’t make the first foreclosure filing until the loan is more than 120 days delinquent (12 CFR 1024.41(f)). If you send a complete application for help more than 37 days before a foreclosure sale, the servicer generally can’t hold the sale while it reviews it (12 CFR 1024.41(g)).

2. Get a free foreclosure prevention advisor

Minnesota has free, nonprofit foreclosure prevention advisors through the Minnesota Homeownership Center: call 866-462-6466 (toll free) or 651-659-9336. Before a Minnesota foreclosure starts, the lender has to send you a notice that this counseling is available and pass your contact information to an approved agency (Minn. Stat. 580.021). An advisor can help you apply to your servicer and explain your loan’s options. It costs nothing.

3. Ways to keep the home

• Reinstatement: pay the past-due amount plus allowed costs. In Minnesota you can reinstate any time before the sheriff’s sale, and the lender has to give you the figure within three days of asking (Minn. Stat. 580.30).
• Repayment plan: catch up over several months on top of your regular payment.
• Forbearance: a temporary pause or reduction in payments; the skipped amount still has to be repaid or added to the loan later.
• Loan modification: a permanent change to the loan (rate, term or balance) meant to lower the payment.

Which of these you can get depends on who owns or insures your loan (for example Fannie Mae, Freddie Mac, FHA, VA or USDA) and your income. See the CFPB’s guide to avoiding foreclosure.

4. Ways to leave on your terms

• Sell the home. If you have equity, a regular sale usually leaves you the most money and does less harm to your credit than a foreclosure, short sale or deed in lieu (CFPB). Start early: a sale has to close before the sheriff’s sale or within the redemption period. Our net proceeds calculator shows what you might walk away with, and we can give you a free home value.
• Short sale. If you owe more than the home will sell for, your lender can agree to accept less. See how a short sale works; our team has handled hundreds of them.
• Deed in lieu of foreclosure. You give the home back to the lender instead of going through foreclosure; ask in writing whether any remaining balance will be forgiven.

5. Watch out for foreclosure “rescue” scams

People facing foreclosure get letters, calls and knocks on the door. Minnesota law protects you:

• A paid foreclosure consultant must give you a written contract, can’t collect any fee until the promised services are fully done, and can’t take a deed, lien or mortgage on your home. You can cancel until midnight of the third business day after you sign (Minn. Stat. 325N.02 to 325N.04).
• If someone offers to buy your home and let you rent or buy it back later, that is an equity purchase. Minnesota requires a written contract and gives you at least five business days to cancel (Minn. Stat. 325N.13), and the buyer must check that you can actually afford to buy it back (325N.17).

Never sign over your deed or pay an upfront fee to “stop” a foreclosure. Free help is available at the number above.

6. If you can’t catch up

Even after a sheriff’s sale, Minnesota homeowners usually have six months to sell or redeem the home and can live there during that time (Minn. Stat. 580.23). See the Minnesota foreclosure process for each step and deadline. Bankruptcy can also pause a foreclosure; that is a question for a bankruptcy attorney.

This is general information about Minnesota law, not legal advice. Your notices, your loan and your lender’s rules decide the details; an attorney or a free foreclosure prevention advisor can look at your papers.