Minnesota Foreclosure Process
Minnesota real estate got swept up in the tidal wave of foreclosures like every other state after homes vales peaked in July 2006. While 2011 Minnesota foreclosures were down 17% from the previous year, they still remain above 20,000 foreclosures for the year. (see chart below) In the first 2 quarters of 2012, Minnesota saw 9,565 foreclosures, down 15% from the same period in 2011.
Clearly, while it appears that the Minnesota real estate market is on the mend, there are still a lot of people struggling to keep their house. We hope the following foreclosure process chart and step by step explanation of the Minnesota foreclosure process will help Minnesota home owners understand what is happening and what they can do about it.
1. Missed mortgage payment
As any Minnesota homeowner knows, being late on one mortgage payment can have a crippling effect on your credit report. However, if this is a onetime event, and the payment is not more than 30 days late, this does not lead to foreclosure. As a matter of fact, if your mortgage payment is less than 30 days late, this will not even show up on your credit report. (In spite of the frantic calls from your lender)
Things start to get ugly when the homeowner becomes late on two consecutive mortgage payments. , Once a homeowner becomes 3 mortgage payments behind, your Minnesota Mortgage Company will start to pursue the foreclosure process. The most common form of Minnesota foreclosure is the “Foreclosure by Advertisement”.
2. Mortgage Company Processes Foreclosure
At this point in the process, your mortgage company will empower a Minnesota real estate attorney who will begin by filing the necessary paperwork at the Minnesota county court where the property is located and a date for the sheriff’s sale is chosen.
As I mentioned above, in Minnesota, a majority of the foreclosures are done by advertisement of foreclosure. The attorney for the foreclosing mortgage company must advertise in an approved paper for 6 weeks prior to the sheriff’s sale. While this is happening, the mortgage company will continue to try to reach homeowner and get them to pay their past due amounts.
Believe it or not, mortgage companies want to avoid foreclosure as much as the homeowner so they are willing to get creative in their efforts to get the homeowner caught up. Some Minnesota mortgage companies have offered to add the missed payments onto the end of the loan in an effort to avoid the foreclosure process.
3. Sheriff’s Sale
At the sheriff’s sale, the house is sold to the highest bidder, usually the company or bank that actually holds the mortgage. The good news for the homeowner is that the highest bidder does not take immediate possession of the home. And in many cases, the delinquent home owner is still living in the home when the sheriffs’ sale happens. At this point, the property enters the redemption period.
4. Redemption Period Begins
Once the redemption period starts the homeowners can no longer simply pay the past due amounts and be caught up. In Minnesota, the redemption period lasts 6 months, starting on the date of the sheriff’s sale. The only way a homeowner can save their home now is to obtain a new Minnesota mortgage, which is near impossible, or find other sources of money, ( e.g. family, sale of other assets, etc. ) to buy the certificate of redemption from the mortgage company..
5. Redemption Period Ends
When the redemption period ends, the highest bidder from the sheriff sale becomes the legal owner of the Minnesota property. If the property is vacant, the mortgage company begins preparing the home for sale.
If the homeowner does not move out, they now have the same rights as a standard tenant that stays past the end of their lease. The new owner must now start the eviction process. The eviction process typically takes about 3 weeks in most Minnesota counties.
Some mortgage companies may offer “cash for keys” which is where the bank will give the homeowner hundreds or even a few thousand dollars.to vacate.$200-$3000, in order to get them out of the home faster
6. The Property is listed for Sale
Mortgage companies are interested in getting as much of their money back as they can and as soon as possible so the home will be listed for sale as soon as possible.
Click here to see the most current list of Minnesota Foreclosures for Sale. This list is from the MN MLS and is updated daily to insure accuracy.
Charts provided by www.housinglink.org