Minnesota Foreclosure Prevention Efforts

For 2009, Minnesota ranked 20th among all states in foreclosure rate, an increase of 56.28% from the year before. Nationally, 2009 was the worse year for foreclosures in US history, with 2.8 million property owners receiving a foreclosure notice.

Most of Minnesota’s foreclosures are handled out of court due a power-of-sale clause contained in the mortgage. The lender has to mail a default notice to the borrower before scheduling the sale.

The foreclosure sale notice must be published for six weeks.  At least four weeks before the sale the property’s occupants have to be given the foreclosure notice in person .

The county sheriff conducts the foreclosure auction between 9:00 AM and sundown usually at his office. The time frame for a foreclosure in Minnesota is typically 60 days.

Lenders may be able to obtain a deficiency judgment for the unpaid balance of the mortgage. A borrower usually has a six-month redemption period after the sale, although some mortgages allow for a 12-month period. The homeowner can redeem the property by paying the entire amount of the bid plus interest and costs.

Effective June 15, 2009 Minnesota state law allows homeowners who have fallen behind on their mortgage payments to postpone the foreclosure sale by five months to bring the mortgage current. Utilizing this option reduces the post sale redemption period to five weeks. The following requirements must be met:

• The property must be a primary residence of one to four units.
• The first publication of the foreclosure sale must have occurred.
• The homeowner must file a notarized affidavit with the county recorder or registrar and with the sheriff holding the sale at least 15 days before the sale is to take place. Here’s a sample form.

Postponement can only be done once. Homeowners unable to bring the mortgage current at the end of the five week period must vacate the premises.  The Minnesota Home Ownership Center (MHOC) has created this fact sheet with more information.

MHOC supports a network of 25 organizations that offer mortgage help. In 2008 more than 11,000 homeowners received counseling from these groups. MHOC has scheduled a series of Borrowers’ Workshops throughout the coming months. Here’s a listing of upcoming events.  For foreclosure prevention help from MHOC call (651) 659-9336; 311 within the city of Minneapolis; or toll free at 1(866) 642-6466.

If you live within the twin cities, you can get help through the Habitat for Humanity Mortgage Foreclosure Prevention Program (MFPP) which provides free counseling and referrals to homeowners who have fallen behind on their mortgages. The program offers help to borrowers in all neighborhoods and income levels. MFPP specialists analyze homeowners’ finances to assess whether or not they can keep their homes. Then the counselors develop a home preservation strategy. MFPP is on track to help more than a thousand mortgagors keep their homes in 2009. To schedule an appointment, call (612) 331-4090 extension 3 or email adade.amenounve@tchabitat.org.

For additional help, here’s a complete list of US Department of Housing and Urban Development, HUD approved foreclosure counseling agencies in Minnesota.