– Is there a right of redemption? Yes
– Are deficiency judgments allowed? Yes
– Are judicial foreclosures available? Yes
– Are non-judicial foreclosures available? Yes
– What is the timeline? Usually 60 days
– What are the primary security instruments? Deed of Trust, Mortgage
In Minnesota, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
What is a judicial foreclosure?-The judicial process of foreclosure involves filing a lawsuit to get a court order to foreclose. This happens when no power of sale is present in the mortgage or deed of trust. In most cases, after the court declares a foreclosure the home will be auctioned off to the highest bidder.
What is a non-judicial foreclosure?-The non-judicial process of foreclosure is used when a power of sale clause (when the borrower pre-authorizes the sale of property to pay off the balance on a loan if they default) exists in a mortgage or deed of trust. 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/their representative (trustee). Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.
Power of Sale Foreclosure Guidelines- If the deed of trust or mortgage contains a ‘power of’ sale clause and specifies the time/place/terms of sale, then that the course of action that must be followed. In Minnesota, however, a non-judicial foreclosure may only occur if there is no lawsuit to collect the mortgage already going on, there has been a recording of the mortgage and any assignments of the mortgage to new lenders, and a notice has been given eight weeks before the foreclosure.
If all three of these circumstances have occurred, the procedure will continue as follows :
- 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 all be recorded in the county where the property resides.
- The sheriff of the county in which the property is located must conduct the sale on the date specified in the notice of sale. At some point during the sale, the sheriff reads an itemized statement (filed by the lender) of the amount due at that time and the property is sold to the highest bidder, who gets a certificate of sale.
- Lenders may pursue a deficiency judgment, but it is limited to the amount of the fair marker value of the property and the unpaid balance of the original loan. Borrowers have up to one year to redeem the property by paying the past due amount on the loan.