Home ownership has been the pinnacle of the American Dream for more than a century. Like finding a spouse and starting a family, many consider the act of buying a home to be a crucial step on the ladder of success, status, reputation, and security. But with COVID-19, or coronavirus, threatening the financial status of many Americans, including Minnesotans, foreclosure might be a fear for many.
Would-be homeowners often spend years saving for a down payment to a starter house or their dream home. They search for the right home in the right neighborhood that is within the family budget and suits the needs of the parents, children, and pets that may be living there. Purchasing a home can dictate where you send your kids to school, where you work, what restaurants you frequent, where you shop, and so much more—so it’s no surprise that when the day comes to move in, there can be tears of joy, a rush of relief, and a deep excitement about the new chapter of life that is unfolding.
Bottom line: buying a home is not just another purchase. It is a special, life-changing moment that defines you and your family for years to come.
Home ownership can give a family a sense of rootedness in the community, as well as a sense of legacy, security, and pride. It is an investment that can shape a family’s financial well-being for decades into the future. With that in mind, it is fair to assume no new home buyer ever expects that one day that home may be taken away from them. But the truth is, life happens. The family breadwinner can lose their job, an unexpected emergency expense arises that requires a complete revision of financial priorities, the market can take an economic downturn or be hit with a full-on recession… there are frighteningly many reasons a family or an individual may suddenly be unable to pay their mortgage. What’s more, there are frighteningly few mistakes or accidents that family or individual can afford to take before their bank may come calling with that dreaded word: “Foreclosure.” A bank or lender sending notice that foreclosure may be in your future can cause a wave of emotions ranging from stress and anxiety to heartbreak. That’s why it’s important to have a real estate lawyer on your side as you fight to save your home.
Seek Legal Help From the Best Foreclosure Attorneys in Minnesota
Understanding the foreclosure process during this difficult time can help clarify a path forward—and seeking legal advice from one of the trusted Edina foreclosure lawyers at Morris Law Group can make a world of difference as you navigate through this stressful life situation. We understand, we care – and we are here to help. Give us a call at (952) 832-2000 or contact us here to schedule a free consultation with one of our experienced Minnesota real estate lawyers.
Below is an introduction to Minnesota foreclosure law. Read on to find out how foreclosure could affect you and your homeowner status, and whether your foreclosure proceedings are following the letter of the law—or not.
Foreclosure Can Cost More Than You Think
If you receive a notice of foreclosure from your bank, you may not know where to begin in terms of understanding the consequences. Unfortunately, foreclosure has significant long-term impacts, not only on a family’s home life but also on credit ratings and more. In the state of Minnesota, a home foreclosure sale appears on the public record and will be reported to credit bureaus. That can have an outsize impact on your credit rating, which may have big financial consequences even years later.
Foreclosure can also cost you more than just your home: If the debt owed by the homeowner is greater than the amount the lender is repaid in the foreclosure sale price, the lender may seek the rest of the debt owed to them—known as a “deficiency”. These are just a few of the financial consequences of foreclosure that go above and beyond losing your house. At Morris Law Group, we take foreclosures seriously. Our attorneys seek the best outcome for all of our clients who face this legal action.
Minnesota Foreclosure 101
If you feel lost in the foreclosure process and unsure whether the parties foreclosing on your property are doing the right thing, you’ve come to the right place. Foreclosure laws can be challenging to parse and can feel overly confusing for families who are likely already facing a stressful chapter of their lives. Below is a brief explanation of the legal foreclosure requirements, both federally and at the state level.
What Does Federal Law Say about my Foreclosure?
Laws and statutes regarding foreclosure generally vary by state and can change year to year. They can also be interpreted differently by different courts and agencies—so it is always a good idea to speak with a foreclosure expert about what you can expect from the legal process. On Jan. 10, 2014, however, federal laws regarding foreclosure were designed and enacted to help protect consumers from wrongful actions taken by mortgage lenders. All 50 states, including Minnesota, must abide by the regulations outlined in the enactment. The law was partially introduced in response to the foreclosure crisis of 2008, when lenders could not keep up with the dramatic rise in consumers needing assistance. The law created several important metrics to help ease the difficult situation of foreclosure for homeowners around the country and to prevent another housing crisis from happening.
Under the 2014 law, a lender in most circumstances must follow a series of steps so that the borrower, (in other words, the homeowner) has enough time to settle any late fees they owe or pursue alternatives to payment, like a modification of the mortgage. Importantly, the lender will put the foreclosure on hold for a period of 120 days—giving homeowners roughly four months to consider what next steps will be best for their family to take.
This period of 120 days is known as “pre-foreclosure.” During pre-foreclosure, lenders or loan servicers are required by law to provide specific types of assistance to homeowners facing foreclosure and having trouble making their monthly mortgage payments. This includes the following measures:
· The servicer or lender must reach out to the homeowner within 36 days of a missed payment, and within 36 days of each subsequent missed payment, or “delinquency.” If the servicer cannot get ahold of the homeowner during this time, it does not matter—they still must try to reach out again 36 days after each delinquency.
· Within 45 days of a missed payment, the servicer generally must inform the homeowner about the loss mitigation options they have, ranging from mortgage mitigation, a deed in lieu of foreclosure, or a short sale. Usually the servicer will assign specific personnel to help a homeowner through these options, and that individual will make themselves available to clarify questions that arise, ranging from the status of a submitted application, how to appeal if an application is denied, and others. Again, the servicer must reach out within 45 days of each missed payment—although they need only provide written notice to the homeowner once within 180 days.
If the 120 days has passed and the payment for the loan remains outstanding, and if the homeowner has failed to file a loss mitigation application, according to federal law the lender can then move on to the process of foreclosure. If the 120 days has passed and the homeowner has filed a loss mitigation application, however, the servicer of the loan cannot yet begin the foreclosure process unless certain conditions are met.
A Morris Law Group foreclosure attorney can help you submit a loss mitigation application—and that application can mean the difference between you being able to keep your home or losing it back to the lender or another interested party. The application can enable you to enter into a repayment plan or a loan modification. If these options are not feasible, our attorneys can help you bypass the painful process of foreclosure by working with you on a short sale or other selling options.
What Does Minnesota Law Say About My Foreclosure?
The 120 day time period is a great help to many homeowners who find themselves delinquent on a loan. Likewise, Minnesota has its own set of legal requirements that lenders and servicers must follow when it comes to foreclosure. The legal process of foreclosure in Minnesota officially begins when the servicer of the loan sends an official letter, typically drafted by the bank representative and sent to the home owner directly, informing the homeowner of the default. The letter – known as a Notice of Default – is recorded by the county in which the home is located. After this initial step has been taken, the servicer files a court action against the homeowner, and if the court decides against the homeowner, a sale of the property will be scheduled.
Upon confirmation of a sale, the lender is required to provide a foreclosure advice notice to the home owner providing information on what steps may be available to them to prevent the sale, and what they can expect after the sale is concluded. In Minnesota, these notifications from bank to homeowner must be sent once every 60 days until the date of the sale itself.
Foreclosure in Minnesota: What Are My Options?
It is important for homeowners to keep in mind that just because you have been served a foreclosure notice does not mean foreclosure of your home is an absolute certainty. The law grants all homeowners facing this legal case several options. In Minnesota, this includes three specific possibilities:
· If the homeowner can pay all of the missed payments and any additional fees, they can stop a foreclosure from occurring. This is known as “reinstating” the mortgage and can occur any time before the foreclosure sale takes place.
· If the homeowner can prove their property is classified as a homestead, and is occupied as such, they may have a case to postpone the foreclosure sale. Several steps must be taken for this to occur, all of which a trusted Morris Law Group attorney can walk home owners through.
· If the homeowner has the means, they can attempt to sell their home during what is known as the “redemption period.” This period usually lasts for six months but in some cases may extend to twelve months depending on circumstances. The owner can “redeem” their property if they are able to pay the amount of the bid decided on during a foreclosure sale, and any applicable interest or other fees. By doing this, the homeowner can avoid foreclosure information from appearing on their record, making it a good option for those who have the ability to redeem.
Morris Law Group Can Help Your Foreclosure Case
At Morris Law Group, we help our clients by protecting their rights against lenders and other creditors, as well as in debt collection defense, debtor harassment, unlawful repossession, and much more. If your home is being foreclosed, seek legal guidance and we will work hard to serve you, your family, and your slice of the American Dream: Your status as a homeowner.
About Morris Law Group, P.A.
Integrity and trust is the foundation of our practice. Our passion for client success is matched only by our experience, our reputation for excellence, and our deep understanding of each and every client’s individual needs.
At Morris Law Group, we don’t just counsel our clients. We invest in them.
We’ve been serving the Edina and Twin Cities communities since 2002. Our attorneys provide personalized, cost-effective legal services to clients seeking help in real estate, business development, commercial litigation, and other matters.
Our experienced Edina attorneys – Founder Richard L. Morris, Lillian Ballard, and Nicholas Henry – believe that relationships matter, whether a client is trying to navigate a purchase agreement, get a business off the ground, or dissolve a partnership. Our lawyers appear regularly in state and federal court, in administrative hearings, and in various alternative dispute resolution forums, including mediation and arbitration.
Morris Law Group is the best Minnesota law firm for all of your real estate and business legal needs. We advocate for our clients with professionalism, vigor, and with a results-driven approach.