Minnesota Foreclosures - Part 1

Pre-foreclosure in Minnesota

Once a home owner begins to stop making payments and the bank is aware of the default, the home enters the state of pre-foreclosure. One thing that should always be done is keep in constant contact with the bank. From the second an owner knows they can no longer pay the loan, they should call or write the bank with an explanation of their problems. Banks are not the bad guy (yet) and are willing to work with customers and advise owners of possible solutions. If you choose to ignore their letters of inquiry, you are only making matters worse.

During this time period, it is also advisable to seek help through a Realtor to market the home for sale. Try contacting a local investment club for potential buyers. They might know someone looking for a deal. What ever you do, don't haggle too much. Your goal is to get out of this home without going into full foreclosure and ruining your credit for 10 years. Check your pride at the door and try to leave emotions out of negotiations. (I have first hand knowledge on the stress a possible foreclosure can cause to yourself and your family and will feature a post on the subject at the end of April).

Redemption Periods

There is hope should you find yourself able to reinstate payments or pay for the loan in full. After default, and up until the time of the sheriff's sale, the borrower can stop the foreclosure process by bringing past payment up to date and paying any penalties the bank has charged (usually lawyer fees and such).

Another plus is that Minnesota state law gives the borrower the right to redeem the property after the auction, too. To get your property back, the owner usually has to pay the bank the price bid at auction plus interest. Here are the Statutory Redemption Periods in Minnesota:

6 Months - Most mortgages allow only six months time to return home to owner

12 Months - in order to have a year, one of the following must be met:

• the Mortgage is more than one-third paid off


• the Property is more than 40 acres


• the Property is more than 10 acres and is used for agricultural purposes


• the Property is more than 10 acres and mortgage was originated before July 1, 1987

5 Weeks - if the property has been abandoned, is residential of 10 acres or less, and no more than four units, a home owner won't have much time to redeem the property

In the mean time, if you would like to know more about the foreclosure process in Minnesota, or have specific questions, please do not hesitate to contact me at www.FineHomesofMinneapolis.com or www.minneapolisluxuryrealestateblog.com. Foreclosure can be very stressful so please rest assured that any information you provide will be treated with the strictest confidence.