Minnesota foreclosure laws

Minnesota allows judicial or court and non-judicial or extrajudicial foreclosures. As in all states where both forms of foreclosure are followed, the determining factor as to which one the bank will use is whether the deed of trust or mortgage contains a power of sale clause. The power of sale clause is what allows a bank to skip the step of filing a lawsuit against the owner who is having difficulty making his payments. The power of sale clause saves the bank time and money. Since it is best for banks to spend less on this process and move as quickly as possible to the sale of the home, non-judicial foreclosure is always the first processing option for banks when they can.

The only reason a bank would not choose to use the non-judicial foreclosure process is when there is no power of sale clause in the deed of trust or mortgage. When the power of sale clause does not exist in the courts or the judicial process, it is the only avenue open to the bank. Most deeds of trust or mortgages contain a power of sale clause, so most foreclosures are done out of court.

Sometimes the power of sale clause is so detailed in its instructions as to how the sale should take place that it will state the date, terms, and place where the sale will take place. When this is the case, these instructions should be followed. However, most power of sale clauses are not that specific, and that means that most foreclosures follow the regular process.

In judicial foreclosure, once the bank has received a court order to foreclose, the rest of the process leading to the sale of the property is done in the same way as an extrajudicial foreclosure. There are three conditions that must be met in this state before a foreclosure sale can be scheduled.

First, no lawsuit to collect the mortgage can be pending. Second, the mortgage or any assignment to new lenders must have been registered with the county. Third, a notice of sale must be given eight weeks before foreclosure if it is a family home.

If all of these conditions are met, the next step is for a notice of sale to be filed in the county where the property is located. This notice of sale must contain the owner’s name, the lender’s name, the original loan amount, the current amount of default, the date the mortgage was entered, a description of the property, and the date of the scheduled sale. The time and place of the sale should also be on the notice of sale.

A power of attorney and notice of processing must be filed in the county in which the property is located, before a non-judicial foreclosure can proceed. The notice of sale must be published on a paper with circulation in the county where the home is located, for 6 weeks. This same notice of sale must be given to the owner / occupant of the property. This must be done at least four weeks before the scheduled sale.

The sheriff in the county in which the property is located must make the sale. The home will be sold to the person who makes the highest bid in the sale. This highest bidder will receive a certificate of sale.

The bank can request a deficiency judgment from the person who lost the home because of the sheriff’s sale. This means that if the bank finds that if the amount of money generated by the auction is insufficient, it can try to get more money from the former owner. In Minnesota, the bank has limitations on the amount of money it can ask for in a deficiency judgment. They can only try to find the difference between the sale price of the home and the fair market value of the home. Most banks understand that a person who has lost their home to such a sale probably has no other assets worth pursuing. Therefore, deficiency judgments are seldom sought. The bank does not want to waste time and resources following a course that will not generate money.

However, if the bank believes that the ex-owner has other properties or resources that have sufficient monetary value to make pursuing a deficiency judgment likely to give them the money they want, they will do everything possible to obtain that money.

The former Minnesota owner also has some post-auction rights related to the property. In some cases, the person who loses their home due to a foreclosure sale has up to a full year after the home sale to regain ownership of the home. In most cases, six months is the deadline for this right of redemption. The only amount of money needed to do this is the overdue amount of the loan plus costs and fees, taxes, insurance, and property preservation.