What Is Involved in a Foreclosure in Minnesota?
While foreclosures in Minnesota can legally take place in or out of court, most foreclosures in the state are non-judicial foreclosures. This type of foreclosure does not take place in the court but requires a notice called "foreclosure by advertisement." Non-judicial foreclosures typically take about 90 days between the first missed mortgage payment and the final sheriff's sale, which is followed by a 180-day redemption period, but the actual time line will vary by lender.
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Missed Payments
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Any type of foreclosure proceeding can begin as soon as you miss your first payment on your mortgage. Generally, the lender will start calling and sending notices the first few months a payment is overdue, with those calls and letters accelerating as the missed payments accrue.
Notice of Default
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Under both judicial and non-judicial foreclosure proceedings, the lender must send an official notice of default to begin the process. This notice is usually sent after the third missed payment.
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Court Foreclosure
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If your deed does not contain what's called a "power-of-sale" clause -- which would put it in the minority of Minnesota deeds -- the foreclosure will proceed according to a judicial process. After the lender notifies you of default, it will file an official court action against you. If the court rules against you, your home will then be auctioned off to the highest bidder.
Foreclosure by Advertisement
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Most Minnesota homeowners have a clause in their deed of trust or mortgage pre-authorizing the lender to sell the property to pay off the balance of a loan that is in default. If this is the case, your lender will hire an attorney who must publish an official notice of the foreclosure sale in your local newspaper for six weeks. This notice, or advertisement, must contain the lender's name, the original loan amount and current amount of default, the date of the mortgage, a description of the property, and the time, place and date of the foreclosure sale, under United States foreclosure law.
Sheriff's Sale
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No matter which foreclosure process your lender pursued, the property will ultimately be sold at a public sheriff's sale. The sheriff will read an itemized statement provided by the lender of the amount due at the time of the sale. The property will then be sold to the highest bidder, which is often the bank that started the foreclosure proceedings. The winner must pay the full bid amount in cash or cashier's check at the time of sale.
Grace Period
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Even after the property is sold, the former owner has a redemption period of at least six months, but depending on the property and type of mortgage, it could be up to 12 months to pay off the full amount due on the loan plus late fees, interest and attorney's fees. If you cannot pay by the end of the redemption period, the winning bidder will take over possession rights and ownership of the home.
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References
- Photo Credit County Courthouse image by chas53 from Fotolia.com
