Mortgage Foreclosures in Minnesota: How Does It Work?

14 Jan Mortgage Foreclosures in Minnesota: How Does It Work?

In Minnesota, a home mortgage can be foreclosed by sheriff’s advertisement sale or by court action. Unless there a title defect to cure by means of a court order, almost all Minnesota mortgage foreclosures are done by advertisement.

Foreclosing by advertisement is simpler, quicker and less expensive for the mortgage bank than doing it by court action. Laws governing the foreclosure of home mortgages vary from state to state, and the information contained in this article applies to Minnesota mortgage foreclosures only.

A mortgage can be foreclosed any time you are behind on payments, but lenders commonly wait until you are four to five months behind, or sometimes more. If you can get completely caught up on payments, do it before the lender forecloses. It will save you from having to pay attorney fees for the foreclosure.

If you try to pay only part of what you owe for past due payments, the lender will probably refuse to accept the payment. You will have to pay the entire amount of the past due payments, along with attorney fees if a foreclosure was started, for the lender to consider you as being current.

In Minnesota, a mortgage foreclosure is typically started by a local law firm mailing you a notice of mortgage foreclosure, using first class mail, postage prepaid. The notice must be published in the legal newspaper for the county in which the home is located for six consecutive weeks. The notice form is prescribed by statute, and it contains the date, time and place of the sheriff’s advertisement sale. You are allowed to reinstate the mortgage any time before the sale by paying all the past due payments plus the lender’s attorney fees.

If the sale takes place, most likely the only bidder was the mortgage lender, which bid the amount owing on the mortgage. No matter who bid, you have six months to redeem the property from the foreclosed mortgage by paying the entire balance owed on the mortgage.

Obviously, this is hard to do unless you sell the property, so if the sale has occurred, the homeowner had better get busy trying to sell the home quickly, or all the equity will be lost to the lender. If there is no equity, then perhaps remaining in the home until the six month redemption period expires is the best idea. Under Minnesota law, no deficiency can be collected by the lender when a mortgage is foreclosed by sheriff’s advertisement sale.

Filing a bankruptcy stops a foreclosure sale, even if it has already been scheduled. Chapter 13 can be used to reinstate the mortgage and provide up to five years to catch up on the past due payments. However, it is critical to file the bankruptcy before the sale occurs, otherwise the sale is considered valid and the six month redemption period begins to run.

If you need help stopping a mortgage foreclosure, talk to a bankruptcy lawyer right away so you don’t risk missing this important deadline.

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.
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