foreclosure is a complex process. Some people may approach you about
"saving" your home. You should be careful about any such promises.
The state encourages you to become informed about your
options in foreclosure before entering into any agreements with anyone
in connection with the foreclosure of your home. There are government
agencies and nonprofit organizations that you may contact for helpful
information about the foreclosure process. For the name and telephone
number of an organization near you please call the Minnesota Housing
Finance Agency (MHFA) at (insert telephone number). The state does not
guarantee the advice of these agencies.
Do not delay dealing with the foreclosure because your
options may become more limited as time passes
Foreclosure is a civil process that a lender may take on a loan
secured on real estate. When there has been a default on the loan,
there are two possible foreclosure processes that may apply, a judicial
foreclosure and non-judicial foreclosure by advertisement.
Prior to attempting any foreclosure, a lender must provide the
borrower at least 30 days' notice that a default exists. For some
property, such as agricultural land, there are additional requirements
before a foreclosure may proceed including mandatory mediation.
judicial foreclosure is a legal process that involves the district court
in the county where the property is located. It is essentially a
lawsuit filed by the mortgage holder to obtain a court order to
foreclose. The action is called a Lis Pendens This is used
when there is no power of sale present in the mortgage or deed of trust.
If the homeowner does
not respond to or challenge the Lis Pendens, then the court can
rule against the homeowner and schedule a
foreclosure sale of their
cases, after the court orders a foreclosure, your home will
be auctioned off to the highest bidder.
non-judicial process of foreclosure is an administrative remedy based on
contract. This is the most common type of foreclosure. It
may be implemented when a power of sale clause exists in a mortgage or
deed of trust. A "power of sale" clause is a provision spelled out in
the deed of trust or mortgage agreement where the borrower
pre-authorizes the sale of property to pay off the balance on a loan in
the event of the their default. In deeds of trust or mortgages where a
power of sale exists, the power given to the lender to sell the property
may be executed by the lender or their representative, typically
referred to as the trustee.
There are a number of conditions must be met before sale by
advertisement can be undertaken.
- There must be a default on the mortgage and a notice a default,
- no lawsuit to collect on the mortgage may be underway,
- the mortgage itself and any assignments of the mortgage to new
lenders must have been recorded and
- the notice must be given eight weeks before foreclosure on a
If an attorney is involved in the foreclosure, the attorney's
authority must be shown by a power of attorney that has been properly
recorded. Attorney's fees are set by statute for foreclosure sales.
therefore, a borrower can't be billed indiscriminately for attorney's
fees during the foreclosure process.
foreclosure may proceed as follows:
- Notice of sale.
A notice of sale containing the borrower and
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, must be recorded in the county where
the property resides.
- Sale. The sheriff or
a sheriff's deputy in the county where the
property is located must conduct the sale on
the date specified in the notice of sale.
The property is sold to the highest bidder,
who will receive certificate of sale.
Certificate of Sale
After the sale, the sheriff will prepare a
certificate showing the amount of the sale and
the amount left unpaid on the loan.
Borrowers have up
to one (1) year to redeem the property by paying
the past due amount on the loan after the sale
Lender may pursue a
deficiency judgment if the price realized at
auction does not cover the existing mortgage or
costs of foreclosure. It is, however, limited to
the amount of the fair marker value of the
property and the unpaid balance of the original
For additional information
Representing banks, Mortgage lenders and Individuals
going through foreclosure