The foreclosure process in Minnesota

foreclosure

Foreclosure on the American Dream – by Kevin Dooley

The foreclosure process is a mystery to a lot of homeowners. So here’s a timeline that explains how foreclosure by advertisement works (as opposed to foreclosure by lawsuit, which is rare, and has a completely different timeline). Keep in mind that your timeline may vary, sometimes by a lot.

Month 0: You miss a payment. The whole process kicks into motion when you can’t make payments on your mortgage anymore, or decide not to make payments. At first the mortgage lender might start calling you or writing you letters. The lender might also reach out to see if you need assistance or if you’re eligible for a loan modification. At some point you’ll receive a default, or “intent to foreclose” letter. But remember that from this point, you still have a lot of time before the foreclosure actually happens.

Month 3: Your case is sent to an attorney. It’s usually about three months of missed payments before your file is sent to a foreclosing attorney. It could be less, it could be more. The attorney might take a couple of tries to get you to start making payments again, usually by calling you or writing threatening letters.

Month 4: Service and publication. In foreclosure by advertisement, the lender must serve you with foreclosure papers. The papers will tell you the date of the sheriff sale, which must be at least six weeks in the future. Then the lender has to publish a foreclosure notice in the newspaper for six consecutive weeks. If the lender skips any of these steps, or doesn’t complete them correctly, the foreclosure may later be attacked in court.

Month 6: The sheriff’s sale. The sheriff’s sale is a really important date, for two reasons. First, it is the last date you can bring your mortgage current in order to stop the foreclosure. After the sale, it might not be enough just to pay the lender the amount you’re behind.

Second, after the sheriff sale is completed, we can no longer use bankruptcy to help you catch up on your mortgage. If your sheriff’s sale is scheduled for 10 a.m. on Monday, and we file your bankruptcy at 9:59, the sale is void. If it’s filed at 10:01, we’ve missed our chance.

Under Minnesota law, a homeowner can also delay a sheriff sale one time for five months, in exchange for a shortened redemption period to five weeks (see below). This must be done between the date the sale is first published and 15 days prior to the sale. The process isn’t all that easy, so don’t wait until the last minute if you want to postpone your sale.

Month 12: The end of the redemption period. The redemption period is a six month period starting from the date of the sheriff’s sale. During the redemption period, you can continue living in your home. By this time, it’s too late to get the mortgage current by paying past-due payments, but you can “redeem” the property by paying the entire sheriff’s sale amount plus interest and fees anytime before the redemption period expires.

Month 13: Eviction. Eviction is the final step in a foreclosure. After the redemption period has ended, if the lender wants get you out of the house, it must file for an eviction in court. This usually takes about a month to complete. People don’t usually like to be evicted, so most people move out of the house on their own sometime after the redemption period ends.

No matter where you are in this process, we can help you determine your options, including litigation and bankruptcy. If you want to talk more about how to prevent foreclosure, call us at (612) 564-4025 or email us.

foreclosure-footer

 

32 Responses to “The foreclosure process in Minnesota”

  1. James

    I’m curious as to how the HOA dues play into this. At what point in the timeline would you say it’s safe to stop paying the HOA dues? After the Sheriff’s sale or after the redemption period? Or after eviction notice?

    Reply
    • David Friedman

      The HoA dues are paid off as a lien on the property after the sheriff sale. There’s no reason to pay HoA dues after the sale unless you’re planning on redeeming.

      Reply
  2. Jason

    In the MN forclosure process is there any required notice given to the borrower by either the attorney of the lender or the lender themselves in regards to when the publication will begin or can they just publish it in the paper whenever they want.

    Reply
    • David Friedman

      Sort of. They do have to notify the borrower, generally by hand-delivering a copy of the notice, that the sheriff sale has been scheduled. There’s no particular requirement that they notify the borrower that the publication has begun. Let me know if you have follow-up questions.

      Reply
  3. Paula

    After a sheriff’s sale, does the property manager have the right to come onto the property during the 6th month redemption period. For example, wander around the property taking photos versus taking shots from the street? Also, is it lawful for a property manager to place a large white note on the door of the person still occupying the home during the redemtion period with identifying private information on the residence of the home. And, lastly, does the property manager have the right to come into your home without your consent? Thank you.

    Reply
    • David Friedman

      Paula,

      The property manager does not have possession of the property until the homeowner is evicted, so he/she cannot come into your home. But I would say there’s nothing illegal about taking photos from the street, since anyone can. The note on the door is a trickier question and would probably require an attorney looking at the specific situation.

      Reply
  4. Heather

    I haven’t paid for my house since June 2011. I declared bankruptcy in January 2012 at which time the Trustee took possession of the house. In July 2012, the Trustee abandoned their interest in the property.

    I can’t get Citimortgage nor the firm they hired to foreclose on the daned house! It’s been vacant since October 2011. Isn’t there any way to speed up the process?

    Reply
    • David Friedman

      You can offer the lender a deed-in-lieu of foreclosure. But no, there’s no way to force them to take the property.

      Reply
  5. Cindy

    My property in inforclosure and I’m wondering how much time I have. Their is a person coming to my door to serve me papers.

    Reply
  6. Aaron Hackett

    If I have my home loan discharged and not reaffirmed and has been almost 2 years may I walk away? Will the forclosure process be the same??

    Reply
    • David Friedman

      If your loan wasn’t reaffirmed, you have no personal liability on the mortgage. This means that if the house sells (at foreclosure) for less than what you owe, you won’t be responsible for the difference. As for whether the foreclosure process is the same, this depends on what state you live in. Here in Minnesota, there are no differences that I can think of.

      Reply
  7. Mathew Sorensen

    In September my divorce was finalized. The decree states that my ex is to pay for the mortgages on the home and if she is to fall behind the home was to be put up for sale. She was also ordered to either refinance my name off of the mortgage or sell the home in 90 days, which she did not do. She has now fallen 4 months behind on the mortgage and the bank is threatening foreclosure. The bank will not help me out, even though I am not technically responsible. I cannot afford the payments on the house after giving her both spousal support and child support, which she is supposed to be using for the house payment. As such, my credit has taken a major hit and I have seen in just a few months my credit rating from excellent to now poor. This will also affect my ability to own a home in the future and move out of my small place. I have three children who reside with me. I have a court hearing in a little over a month regarding this, but there is really little recourse, what can I do? Can I sue her in civil court as well? She refuses to put the house up for sale and will not seek employment, so she is unable to refinance my name off. I am getting screwed!!!

    Reply
    • David Friedman

      You will have to enforce your divorce decree against her. There’s nothing that I know of that you can do with regard to the lender because in their eyes, you’re still liable on the home mortgage even though your ex might owe you pursuant to the divorce.

      Reply
  8. sue

    What is the date you should base the 3 year wait, (before you can purchase a new home)? I can’t seem to find this anywhere. Forecloseure occured in Minnesota.

    Reply
    • David Friedman

      I don’t know anything about a three-year wait before you can purchase a new home. I think this varies from lender to lender.

      Reply
  9. Lori hatfield

    I have a townhouse in the foreclosure that I have rented in the past. My tenant knows it is in foreclosure and still lives there. She has been through life altering times and has no income. She has paid me very little rent in the last year. But that is not why I let it go into foreclosure. I just got a letter with a date for the sherifs sale, will she have to vacate before this date?

    Reply
    • David Friedman

      No, if the property is occupied, generally the tenants have between six and seven months to stay in the home before eviction.

      Reply
  10. Molly

    Does a homeowner have to continue to pay electric and gas bills after the sheriff’s sale if they no longer live in the property?

    Reply
    • David Friedman

      Absolutely, unless the homeowner cancels service.

      Reply
  11. Nathan

    If a home is upside down in value in MN: When you file BK 13, is the total amount owed on a note the amount to “repay” during the 3-5 years, or modified? Or, is the market value of the home, and the remaining amount owed listed as unsecured debt? Or, is the whole amount of the note still owed, even though the property is upside down?

    Reply
    • David Friedman

      Nathan, in a Chapter 13 bankruptcy, if the home is your primary residence, generally a first mortgage doesn’t change at all when you file bankruptcy. So you pay your regular monthly payments as they come due, with any mortgage arrears paid through the plan. Junior mortgages are treated differently.

      Reply
  12. Bonnie

    I live in St. Paul MN, and my redemption period ended yesterday (I postponed the sheriff sale for 6 months, so my redemption period was 5 weeks). I have not received any communication of any kind from either the lender or the lawyers since the sheriff sale. I really need to know how long I have to stay at the property before an actual physical eviction, since I have started moving but will need several more days to finish the process. A few days before the end of the redemption I spoke with the lender, the law office, and a local housing agency about the time after the redemption period and received 3 different responses ranging from “don’t worry about it yet” to “better gather your most important things in case the sheriff comes to throw you out at 5 pm”. If the lender starts the eviction process, how fast or slow can it go? I’m panicking about a knock at the door.

    Reply
    • David Friedman

      An eviction is a separate legal process from a foreclosure. At some point, the lender will serve you with an eviction notice and you will have some time from there to finish vacating the property. If the eviction has not yet been served, then the sheriff can’t come knocking.

      Reply
  13. Marianne

    My son was just refused a mortgage modification by Wells Fargo, he is behind in his payments and according to our correspondence they have not yet but will be filing for foreclosure. He does not have the funds to bring the loan current and if he did he still can not afford the monthly payments. His mortgage is approximately $100K more than FMV………would filing bankruptcy help him keep the home?

    Reply
  14. Dana

    We were discharged in Sept 2013 for Chapter 7. We originally were going to reaffirm our mortgage (against our attorney’s advice) so that we could build our credit back up with the lender reporting our payments. However, the lender denied our reaffirmation agreement, which actually ended up being a good thing because we have decided our monthly payment is becoming a strain and definitely not worthy of this house. We would like to move into a new house and will be doing so with the help of a family member who is purchasing the house and we will contract to deed from them. My question is, can we stop paying our mortgage payment as we are really just paying to stay, save those mortgage payments and “walk” away from the current house with no problems? How long would we be able to stay in the house before the foreclosure proceedings take place?

    Reply
    • David Friedman

      Dana,

      While I can’t give you specific legal advice without knowing more about your situation, I can give you some general guidelines. In a Chapter 7 bankruptcy, as long as the debt is not reaffirmed, your personal liability on the debt is wiped out. This means that the lender has no claim personally against you, but they keep their lien on the property. This means that in most cases, their only remedy when you walk away is to foreclose on the property.

      From your comment, I can’t tell what state this house is in. Here in Minnesota, you typically have many months to leave a property after a foreclosure. You have the amount of time it takes for the lender to get foreclosure papers filed (at least six weeks) plus your sixth month redemption period, plus the amount of time it takes them to evict you.

      Sometimes this process can last longer than a year. Let me know if you have follow-up questions.

      Reply
  15. Marie

    We have just been given the ”leave in 24 hour” notice. However, we sent the bank and it’s atty. a certified letter- a notice that we are filing a Major Civil Suit, as the bank did not follow the correct procedure in the foreclosure process. Shouldn’t we be able to remain in the home until we are told we have a case or not?

    Reply
  16. Crystal

    Hello! We live in MN and were just served notice of the sheriff’s sale today. We would like to stay in the house as long as possible, although we do not plan to keep the house since the payments have become unmanageable for us. Is there anything we can do to slow down the process?

    Thanks for a wonderful website. This is a great resource!

    Reply
    • David Friedman

      Crystal,

      The first thing I would do would be to call the lender and ask them to delay the sheriff sale so that you can submit a loan modification application.

      A bankruptcy would slow down the process if you have other reasons to file bankruptcy (you can’t file a bankruptcy JUST to slow down the foreclosure process.)

      Reply
  17. Meg

    Thx for your post. My house is underwater $100,000 Two questions: 1. it is okay to leave house empty while it’s in the default process? (I’m moving out of state for work). 2. If NOT okay and I find a renter aware of the process, can they get electic and gas in their own name at my residence? And, what do you charge for a consultation for a ‘strategic default?’ Thank you!

    Reply
    • David Friedman

      Meg,

      Thanks for getting in touch. I can’t give you specific legal advice without knowing the particulars of your situation, but here are some general tips.

      There is no requirement to stay in your home while it’s in default, however, you want to make sure that there are no dangerous conditions in or outside the home that would harm someone. Also, you should take any reasonable steps to protect the home from internal damage (i.e. turn off the water and drain the pipes before winter if they might freeze otherwise).

      Yes, if a renter is aware of the foreclosure (and I don’t know there’s any legal requirement to inform them, but I think it’s at least the right thing to do) then they can get the utilities in their name.

      We charge $300 for a consultation on strategic default. Get in touch if you want to set something up.

      Reply

Leave a Reply

  • (will not be published)

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>