Minnesota Foreclosure Procedure
Judicial Foreclosure and Non-Judicial Foreclosure, by advertisement, are allowed under the state of Minnesota. The foreclosure period usually last sixty (60) days and the right of redemption and deficiency judgments are allowed.
Judicial Foreclosure
If the lender prefers a court action, a lawsuit has to be filed so that the court could issue an order commanding the said property and allow this to be sold in a public auction to the highest bidder. However, a period of thirty (30) should be the leeway given to the borrower so that he could be advised of his default payments. In case of the property being agricultural, an intricate mandatory mediation process has to be followed.
Non-judicial Sale by Advertisement
Under Minnesota foreclosure laws, mortgages with power of sale clause may be foreclosed by advertisement but has to meet certain prerequisites, that the payments on the mortgage are overdue; that there is no pending case on the property; that the mortgages records, the owners, are properly recorded and a notice should be extended to the borrowers eight (8) weeks prior to foreclosure.
In cases when lawyers are involved in the foreclosure proceedings, a power of attorney is required and attorney’s fees are set by statute during foreclosure sales to prevent the borrowers from exorbitant fees.
Foreclosure Guidelines
The notice of sale should include information such as the name of the borrower the original loan amount, the date of the mortgage, recording information, the amount currently due on the loan including back taxes and unpaid insurance, a property description, the time and place of the impending foreclosure sale and the time allowed by law for the borrower to redeem the property.
Proper documentation should be made by the lender with the sheriff, verification and an itemized statement of the amount due which has to be read during the sale. After the sale, the sheriff will prepare a certificate showing the amount of the sale and the amount left unpaid on the loan.
Special Procedure - Right of First Refusal
The Minnesota Foreclosure law allows the borrowers the so-called “right of first refusal” in cases when the property was bought through foreclosure proceedings by a state agency, a federal agency, a limited partnership or a corporation (other than a family farm corporation. Under this right, the previous owner who lost the property should be given the first chance to purchase his old property at the price and terms an outside buyer is willing to accept for the property. The law applies for the first five years after the property was foreclosed on. The right of first refusal may not be waived or assigned, except to family members by inheritance.
Deficiency
Any deficiency is limited to the difference between the fair market value of the property, as determined by a jury, and the unpaid balance remaining on the old loan. To recover a deficiency judgment against the borrower, the lender must file a lawsuit against the borrower. If the lender already seeks foreclosure by a lawsuit, then all the lender has to do is add a claim to the existing lawsuit. However, when the foreclosure is by advertisement, then an independent lawsuit must be filed to recover a deficiency.
Redemption
Redemption is unusual in Minnesota. The borrower or a junior lien holder has up to one year after the foreclosure to redeem the property however there are stipulations on the time frame due to acreage and abandonment.
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