Foreclosure Defense Attorney in Minneapolis

When you have a mortgage and the lender repossesses the property due to a failure to meet the terms of your mortgage, foreclosure occurs. There are several steps to the foreclosure process. These include default, a sheriff’s sale, and the redemption period.

Default

Borrowers can default on loans by missing even one month’s payment. Lenders will generally send a notice of default before taking legal action to initiate foreclosure. The lender will often attempt to discuss repayment options and begin additional attempts to collect the outstanding debt.

Sheriff’s Sale

Borrowers unable to resolve their debt could find themselves dealing with a sheriff’s sale. Here, Lenders may have the authority to force a sale of the property. The county sheriff will conduct the sale in a public place. Once a sheriff’s sale has occurred, the mortgage can no longer be cured.

Redemption Period

During the redemption period, generally six months, borrowers can remain in their homes and attempt to refinance and obtain a new mortgage. Borrowers can also sell their homes to secure any equity they may have built up during their ownership.

When Does Foreclosure Happen?

According to 12 C.F.R. § 1024.41, foreclosures cannot officially begin until a borrower is 120 days or more past due on their mortgage payments. However, there are exceptions to this rule. Homeowners have a four-month grace period to get current on their mortgage payments or explore other options to cure their debt.

What is Pre-Foreclosure?

Once you have gotten behind on your mortgage payment but the foreclosure hasn’t officially begun, you are in the pre-foreclosure stage of the process.

This is one of the most challenging times for borrowers, as lenders have the authority to charge you late fees, inspection costs, and other expenses that put you further in debt.

Minnesota Laws & Foreclosure

Under Minnesota foreclosure laws, mortgage lenders are allowed to charge around $15 per home inspection and charge borrowers for other services or fees, including:

• Appraisals
• Broker’s fees
• Property preservation fees
• Additional foreclosure-related costs to the lender

Federal Foreclosure Laws

There are multiple federal foreclosure laws under 12 C.F.R. § 1024.39 in place designed to protect borrowers, which include:

• Lenders must attempt to contact you by phone no more than 36 days after missing a payment
• Lenders must attempt to contact you by phone no later than 45 days after missing a payment and inform you in writing of your potential repayment options
• Dual tracking—where lenders pursue foreclosure while a borrower is in an active repayment plan—is also prohibited under federal law

What is the Foreclosure Process?

Lenders have the right to foreclose using judicial and nonjudicial methods when you miss your mortgage payments in Minnesota. Here is how judicial and nonjudicial foreclosures work:

• Judicial Foreclosures – In a judicial foreclosure, the lender will file a lawsuit against the borrower requesting a court order for foreclosure.
• Nonjudicial Foreclosures – In a nonjudicial foreclosure, the lender will need to follow out of court processes under Minnesota law before they can move forward with a foreclosure.

The process for foreclosure generally follows the following steps:

Pre-Foreclosure Notice

Lenders may be required to send borrowers pre-foreclosure notices within 30 days of a notice of default. Under Minnesota law, lenders may also be required to provide borrowers with foreclosure prevention counseling and repayment options.

Notice of the Pendency

The lender will begin the foreclosure process when they file their notice of pendency. This is the notice of a sale being published in your local newspaper a minimum of six weeks before the sale of your home.

Redemptions Right Notice

The lender will send you a copy of your right to redeem the property and your rights after selling your home. This is the stage in which lenders should provide borrowers with information regarding how they can avoid foreclosure.

Postpone the Sale

Once these notices have been issued, if your property is considered a homestead and other requirements are met, you can postpone the sale of your property for up to 11 months.

Foreclosure Sale

When your home is being sold, lenders will usually start by making credit bids, allowing them to make a bid up to the total amount you owe on the house, including all other costs and fees they may charge you.

If the lender is the high bidder at your sale, they could obtain a deficiency judgment against you. However, if a third party is the higher bidder and offers more than you owe on your home, the excess proceeds are your right.

How Can You Stop Foreclosure?

There are multiple ways you may be able to stop your home from being foreclosed on. Some of the more viable options include:

• Loan Modification – Your lender may be willing to modify the terms of your mortgage so you can get current on your outstanding payments and continue to make payments.
• Reinstating the Loan – Your lender could reinstate your loan at any time prior to the sale of your home if you can work out a repayment arrangement.
• Request a Forbearance – Your lender may be willing to grant a forbearance which will allow the temporary suspension of your payments until you can begin making payments once more.
• Redeeming the Property – You can pay off the total amount of your mortgage before the foreclosure sale to redeem the property. Homeowners have one year to buy back their homes.
• Enter a Repayment Plan – If you can set up a plan of repayment allowing you to cover your past due balance and future payments, they may cease foreclosure attempts.
• Declaring Bankruptcy – If you declare bankruptcy, an automatic stay goes into effect, and your lender won’t be able to proceed with the foreclosure process. Declaring chapter 7, 11, or 13 bankruptcy may be appropriate depending on the circumstances of your case.
• Refinance Your Mortgage – If you can find a lender willing to issue you a mortgage with a fixed rate or lower interest rate, you may be able to avoid foreclosure.
• Consider Selling Your Home – Depending on the details of your case, selling your home may be in your best interests. This could help you afford a different home and avoid the financial distress that comes with foreclosure.

Watch Out for Scammers

You might be shocked that scams involving mortgage default and foreclosure are far more common than you thought. Foreclosure scams can take several forms, but two of the more common include:

• Equity Stripping Scams – A con artist convinces homeowners to sign over the deed to their home to them. Scammers make promises to keep homeowners in their homes but receive little to nothing for their homes in equity.
• Foreclosure Consulting Scams – Companies masquerade as counseling agencies but request upfront fees from distressed homeowners hoping to avoid foreclosure. However, the company’s counseling services will do little or nothing to help borrowers avoid foreclosure.

Minneapolis Foreclosure FAQ

Answering some of your most pressing foreclosure questions.

How long do I have to move out after foreclosure?

The amount of time you’ll have to move out of your home after foreclosure can vary widely based on the circumstances of your case. If you refuse to leave your home after the foreclosure sale, the home’s new owner may bring an eviction lawsuit against you.

What is the mortgage company prohibited from?

Mortgage companies have many restrictions, including:

• Mortgage companies must decide if you qualify for repayment options before foreclosing on your home
• Mortgage companies are prohibited from dual tracking
• Mortgage companies are prohibited from beginning the foreclosure process if you have attempted to work out a repayment option or they have yet to decide on loan modification
• Mortgage companies are required to stop Sheriff’s sales if you apply for a loan modification or other repayment options within seven business days of the Sheriff’s sale, even if the foreclosure process has already begun

Does my lender have any obligations before the foreclosure sale?

Before a foreclosure sale, mortgage companies have specific obligations, including:

• Ensuring you understand what documents your lender will need to process your debt resolution attempts
• Informing you on writing a potential loan modification or other repayment options
• Reviewing your application for debt resolution
• Giving you the chance to appeal lender denials for debt resolution