Many individuals facing foreclosure are unaware of a Minnesota law which may offer them some relief. A Minnesota law is in place which extends the time a debtor has to bring a mortgage current in an attempt to keep their home.
The foreclosure process in Minnesota typically follows this procedure. (Please note that there can be variations in this timeline depending on what type of mortgage an individual has.) A person falls behind on their mortgage, and then the mortgage company sends out a default letter. Typically once the default letter has gone out the mortgage company will not accept payments on the mortgage unless the payment will bring the mortgage current. In other words, if an individual sends in one payment and that person is three payments behind, the mortgage company will typically send back the single payment and would only accept a payment that would cover all three months that the debtor is behind. The mortgage company then hires an attorney to foreclose on the property. At this point the mortgage company will typically stop communicating with the debtor and the debtor must then deal only with the attorney hired by the mortgage company. The attorney begins the foreclosure process. The debtor then receives notice that a sheriff’s sale will be held on the property. The debtor typically gets six weeks notice of the impending sale. The debtor then has up until the sheriff’s sale to bring the mortgage current. Bringing the mortgage current will now include all the past due payments and late fees as well as the attorney’s fees incurred by the mortgage company in pursuing the foreclosure. If this is not done and the sheriff’s sale is held, the only way for a debtor to keep the home would be to pay off the mortgage in its entirety. When the housing market was stronger it was not uncommon for a person to refinance the mortgage after the sheriff’s sale and keep the home. This is now a rare occurrence. After the sheriff’s sale, a debtor has six months (depending on the type of mortgage) to redeem the property. This six month period is called the redemption period. During this period the debtor is allowed to stay in the property and can reclaim the property if the debtor can pay off the entire mortgage.
This law allows a procedure for debtors who are behind on their mortgage to get extra time to bring the mortgage current. In order to qualify to use this procedure the property in question must be the debtor’s homestead. The debtor must submit a sworn affidavit stating the legal description of the property, the fact that the property is homesteaded, the purpose of the submitted affidavit, and the statute citation. The sworn affidavit must be recorded in each county recorder and register of title where the mortgage is recorded. A copy of the recorded affidavit must then be filed with the sheriff conducting the sale and a copy must be delivered to the attorney foreclosing on the mortgage. These actions must be completed 15 days prior to the scheduled sale date, and may be started only after notice of the sheriff sale has been given. There are two effects of recording, serving, and delivering the affidavit: the foreclosure sale is automatically postponed to the first date that is not a Saturday, Sunday or legal holiday and is five months after the originally scheduled date of the sale and the mortgagor’s redemption period is automatically reduced to five weeks. This process can only be done once. Essentially this allows a person more time to bring the mortgage current. In exchange for a shortened redemption period, the debtor essentially gets an extra five month to bring the mortgage current.
If a person is unable to bring their mortgage current during this period, another option is to file a Chapter 13 bankruptcy. A Chapter 13 is essentially a repayment plan that your creditors are required to participate in. This type of bankruptcy will halt a sheriff’s sale and allow the debtor (in some circumstances) up to five years to repay the mortgage arrears. If a person is able to make their regular mortgage payment and has some disposable income after meeting their necessary living expenses, that person may qualify to do a Chapter 13. The Chapter 13 will allow a debtor to pay back mortgage arrears and to pay back unsecured creditors in one payment. A person in most cases is not required to pay back unsecured creditors in full. This will often allow an individual in financial distress relief from collections actions while they bring their mortgage current. It should be noted that once a sheriff’s sale has occurred a debtor is no longer able to file a Chapter 13 bankruptcy in which they will be able to keep the home.
This article is for informational purposes only. The information on this website should not be interpreted as legal advice.