 Minnesota Loan Modification Guidelines
When you develop a definite plan of action with well-timed, well-informed
steps, you can stop the foreclosure process and save your home. We have
outlined the foreclosure process for the state of Minnesota.
Judicial Foreclosure Available: Yes
Non-judicial Foreclosure Available: Yes
Minnesota allows foreclosure in two ways: by advertisement and by court
action. If court action is selected, the lender must file a lawsuit and
obtain a judgment for the amount due and a court order commanding the property
to be sold. Prior to attempting any foreclosure, the lender should give
at least 30 days' notice of the existence of a default. For agricultural
property, complex mandatory mediation procedures must be followed.
Non-judicial Sale by Advertisement
If the mortgage contains a power of sale clause, it may be foreclosed
by advertisement. However, a number of conditions must be met before sale
by advertisement can be undertaken.
There must be a default on the mortgage,
no lawsuit to collect on the mortgage may be underway,
the mortgage itself and any assignments of the mortgage to new lenders
must have been recorded and
the notice must be given eight weeks before foreclosure on a homestead.
If an attorney is involved in the foreclosure, the attorney's authority
must be shown by a power of attorney that has been properly recorded. Attorney's
fees are set by statute for foreclosure sales. Hence, the borrower cannot
be billed indiscriminately for attorney's fees during the foreclosure process.
Certificate of Sale
After the sale, the sheriff will prepare a certificate showing the amount
of the sale and the amount left unpaid on the loan.
Special Procedure - Right of First Refusal
Borrowers have a complex right of first refusal when land is acquired
by a state agency, a federal agency, a limited partnership or a corporation
(other than a family farm corporation). Once the agency or business acquires
land by foreclosure, it will ultimately try to resell it. When it tries
to resell, the old owner who lost the property in foreclosure must be offered
the property in preference to any other purchaser at the price and terms
an outside buyer is willing to accept for the property. The lender must
make a good-faith effort to let the old owner buy it first, hence the term
right of first refusal. The law applies for the first five years after
the property was foreclosed on. The right of first refusal may not be waived
or assigned, except to family members by inheritance.
Deficiency
Any deficiency is limited to the difference between the fair market value
of the property, as determined by a jury, and the unpaid balance remaining
on the old loan. To recover a deficiency judgment against the borrower,
the lender must file a lawsuit against the borrower. If the lender already
seeks foreclosure by a lawsuit, then all the lender has to do is add a
claim to the existing lawsuit. However, when the foreclosure is by advertisement,
then an independent lawsuit must be filed to recover a deficiency.
Redemption
Redemption is unusual in Minnesota. The borrower or a junior lien holder
has up to one year after the foreclosure to redeem the property by making
all the past due payments rather than the entire loan balance after acceleration.
Preliminary Notices
Contents
The foreclosure notice must name the borrower the original lender, any
takeover lender, the original loan amount, the date of the mortgage, recording
information, the amount currently due on the loan including back taxes
and unpaid insurance, a property description, the time and place of the
impending foreclosure sale and the time allowed by law for the borrower
to redeem the property.
Sale Procedures
Documentation
Before the sale, the lender must file a verified, itemized statement with
the sheriff showing the amount due. This statement must be read during
the sale by the sheriff.
Time and Place
The time, place and date of the foreclosure are set forth in the foreclosure
notice.
Manner
In Minnesota, the actual foreclosure sale must be conducted by public
auction. The sale is to the highest bidder.
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