Understanding the foreclosure process in Minnesota is an important part of navigating your own home foreclosure. We have seen many people put their heads in the sand so to speak and they walk away with bad credit, lost their home, and shell shocked by the whole event. You don’ have to go down that route.
There is so much go information on foreclosure today and the whole process that an average person if they want to study can figure it out. You can also get help for foreclosure from trusted experts who have gone down this road before you.
Before we dive in…
Understanding the Foreclosure Process in Minnesota
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back a property, generally after the borrower stops making payments. Normally this can take only a couple of missed months and the journey begins. This beginning stage is sometimes called preforecloser period.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in Minnesota works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible. It can still be really hard, but you at least will go into it with your eyes open and information so you are no blindsided.
It you follow this blog post you will understand foreclosure and pickup on some prevention measures in Minneapolis St Paul that will help navigate your position.
The Basic Stages of A Foreclosure
- There are a few stages that are important to any foreclosure process.
- Foreclosure works differently in different states around the country.
- The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
- Connect with us by calling (612) 444-5088 or through our contact page to have us walk you through the specific foreclosure process here locally in Minneapolis St Paul.
- In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Minnesota Cash Home Buyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Minneapolis St Paul, we can help you.
We buy houses in Minneapolis St Paul Minnesota like yours from people who need to sell fast.
Give us a call anytime (612) 444-5088 or
fill out the form on this website today! >>
Another Foreclosure Resource For Minneapolis St Paul Minnesota HomeOwners: