The Jensen Litigation Firm, PLLC represents entities and individuals in foreclosures. Creditors hire us to foreclose mortgages. People also hire us to defense foreclosures on commercial and agricultural property. If you need an attorney for a foreclosure, we can help. Contact us now, as foreclosures involve tight deadlines.
What are the basics of a mortgage foreclosure?
A lender may start a mortgage foreclosure on a home if the borrower failed to make payments or otherwise breached the note or mortgage. The lender, typically a bank, wants to take back the property, sell it, and be repaid for the loan.
A borrower has limited rights to dispute the basis of the default and contest the foreclosure. If the property is foreclosed, the borrower typically has some redemption period under which he or she can pay off the default and reclaim the property.
This is a simplified overview of the process, which is discussed in Chapters 580, 581, and 582 of Minnesota Statutes.
What things happen before a foreclosure?
Before foreclosing, a lender generally must give pre-foreclosure notice of a default. If the borrower is unable to cure the default within the specified time, such as 120 days, then the lender may initiate a foreclosure. The borrower sometimes has a limited right to postpone the foreclosure, but often does not exercise it.
The borrower may also have loss mitigation rights, as well as consumer rights under federal laws and regulations.
What is a foreclosure by advertisement in Minnesota?
In Minnesota, lenders can foreclose (1) by advertisement or (2) by action.
In a foreclosure by advertisement under Chapter 580, the lender advertises the sheriff's sale in a newspaper and provides notice to the borrower and any tenants. There is no court proceeding or judge involved, and the lender is limited in what foreclosure-related costs it can add onto the debt.
This is a quicker and easier way to foreclose a mortgage, and the typical way banks foreclose.
After the Sheriff's sale, the borrower still has a right of redemption. The length typically depends on the type of mortgage, whether the property is abandoned, and the amount of the mortgage that the borrower paid off.
If there is no redemption from the borrower or a creditor with an inferior lien, the lender will hold title and may dispose of the land as it sees fit. It is important to point out that the borrower may still be entitled to his or her equity in the property less any continuing interest and any foreclosure costs.
What is a foreclosure by action in Minnesota?
In a foreclosure by action under Chapter 581, the bank commences a lawsuit in district court seeking a decree of foreclosure.
This process takes longer and has more up-front costs for a lender, but they can usually add attorney's fees onto the debt. The lender can also preserve a “deficiency judgment” against the borrower if the property is worth less than the amount owed on the loan.
Other reasons a lender forecloses by action is that the mortgage lacks a power of sale clause, the land has title defects, the loan documents are problematic, the borrower cannot be served properly, the bank has multiple mortgages on the property, there are issues with other creditors, or there are related loans covering personal property.
After the judge issues a decree of foreclosure, the lender schedules a Sheriff's sale. The redemption procedure is generally the same as a foreclosure by advertisement, with the bank holding title once the redemption period expires.
Why is it important to hire an attorney for a foreclosure?
It is important that the lender hire an attorney that is familiar with foreclosure laws. If the foreclosure is not done properly, the lender may lose remedies or even face liability from the borrower.
We have the knowledge and experience to handle foreclosures. Do not hesitate to contact us if:
- You are a bank, credit union, or financial company with foreclosure needs.
- You are a borrower that has been served with foreclosure notices or a foreclosure complaint.
- You are a creditor being impacted by another creditor's foreclosure.