New Minnesota Foreclosures Regulations Affect Cities And Lenders

Lenders and cities are affected by changes made to Minnesota foreclosures regulations as they apply to residential properties classified as homestead residences. Most important is the grant of a five month postponement right to the homeowner in the case of forced sales by reason of payment arrears. This right of postponement used to belong exclusively to the mortgagor.

The length of time the foreclosure process takes has not been changed by the amended statute, despite the postponement. The redemption period remains at a half a year for homeowners who do not postpone the date of the sale. For those who do opt to postpone, only five weeks are permitted for redemption period. This means that should a homeowner be granted a postponement and then be unsuccessful in their attempt to get their house payments up to date, they will only have 35 days after the forced sale of their property has been finalized to come up with the balance due on the mortgage after subtracting the proceeds of the sale. As before, mortgage holders may force the defaulting mortgagee into personal bankruptcy at the expiration of the time set as the redemption period.

It is a relief to lenders that sale date postponement is an option that is only available to homeowners once. Should the homeowner manage to get their house payments current within the allotted postponement time frame, they can not go back into default on the property at any point in future and again request the grace period.

The lender is not required to do any new paperwork. Publishing the date of sale does not have to be done again, no new notice of sale is required and the mortgagee does not have to be served a second time. This effort to reduce the burden on lenders in the event of postponement of an approved sale date is unexpected.

Lenders do have additional duties under newly revised Minnesota foreclosure laws in the case of abandoned properties. It use to be that when a property was abandoned it was optional for lenders to take steps to inspect the property, protect it from the elements and secure it from trespass. These option activities have been made mandatory and can be ordered by city officials. Additional maintenance minimums have also been established.

Once a sheriffs certificate has been issued and evidence sufficient for a court to find that a property is abandoned has been established, lenders must enter the premises, change or install locks on all exterior doors and all windows, and commit to undertake periodic inspections. Mortgage holders also have the option of boarding up windows and doors and installing alarm or security systems.

Monies put out by the lender to fulfill these obligations may be added to the principal the homeowner owes on the mortgage. If new locks are put in, keys to the locks must be given to the titular homeowner, if they can be found. The chance of recovering these costs are, of course, small, given that personal bankruptcy on the part of the homeowner is the most likely result of a completed residential foreclosure.

The revised Minnesota foreclosures regulations give cities considerable power in regards to abandoned residences. In the extreme. Cities may apply to have a redemption period reduces so as to allow municipal employees and work crews to gain access to effect needed work.

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