Foreclosure in Minnesota has several stages; default, sheriff’s sale, and redemption. Read on to arm yourself with the information needed to escape from this difficult situation with as little ongoing damage as possible.

Default.

Minnesota law allows your lender to send you a notice of default as soon as you miss a payment, or even if you make a partial payment. ‘Default’ sounds like a harsh word, but it reflects the view of the lender. You agreed to make payments on a certain schedule, and once you’ve failed to do so, you have defaulted on the terms of your loan. Accepting that this is true is an important hurdle to taking back control. Avoiding your lender will make things much worse, very quickly.  So, when you’re in default, you need to:

  • Contact your loan servicer as soon as you know you can’t make your full payment
  • Get free help from one of these Minnesota agencies, managed by the Minnesota Homeownership Center. They provide assistance and information free of charge
  • Be on the lookout for scammers who want to steal your house. By pressuring you to sign things you don’t understand and guaranteeing they can get you off the hook, they paint a very enticing picture. You can recognize scammers because they will ask you for money. Respectable, accredited agencies provide support for free.

Sheriff’s Sale.

If you don’t ‘cure’ your loan quickly, the lender can notify you that they intend to sell your home to recover the outstanding balance of the money they lent to you. There are very limited options at this point. You will have four weeks from the time that you are notified before your house is sold. Wherever possible, homeowners should try to work out a loan modification with their lender to avoid a sale taking place.

When you’re going through a sheriff’s sale, you should:

  • Stay in your home! Do not move out. You will have another opportunity to regain your home, during the redemption period.
  • Consider filing an Affidavit of Postponement — ask a counseling agency if this option is right for you. A postponement with delay a sheriff’s sale from taking place for up to five months. The downside is, if you cannot cure the mortgage at that time, the redemption period (discussed below) will only last for five weeks.

Redemption.

During redemption, you can no longer save your home, but you can attempt to buy it back from the bank. The usual length of the redemption period is six months, although extensions to 12 months may be available.  You will need to secure a new loan, and the loan will need to cover not only the cost of the home but the fees incurred by the sale. This can be very difficult for a borrower to obtain. However, if your house was sold during a period of temporary financial distress, and you have the funds to cover it, this is a viable option. You are allowed to remain in your home during the redemption period.