Possible Short Sale Results Involving One Lender

When there is only one lender who has a mortgage on the property, there is a good chance that you will be able to sell your home and have the lender agree to waive the deficiency that results from not being able to sell the property for enough money to fully pay of the loan.  There are a number of different types of foreclosures that a lender can choose to pursue in Minnesota.  For residential properties, to date, almost all of the residential foreclosures have been "foreclosures by advertisement".  This is a foreclosure that does not go through the courts.  The lender serves a notice on the occupant of the property (not necessarily the owner), publishes the foreclosure notice in a legal publication, has a Sheriff's Sale followed by a Period of Redemption.  If the lender chooses this type of foreclosure, it is giving up its right to go after the borrower for a deficiency if the property does not generate enough money to fully pay off the loan. 

If you only have one mortgage on your property and if the lender has started a foreclosure by advertisement, you have a strong position to obtain a short sale approval from the lender since it has already chosen to give up the right to obtain a deficiency judgment from you.  When negotiating a short sale approval in these cases, you must make sure that the lender agrees in writing to satisfy not only the mortgage but the underlying note.  If the lender refuses to satisfy the underlying loan, you may not want to proceed with the sale because if the foreclosure by advertisement continues to conclusion, the lender cannot sue you for the deficiency.