To effectively navigate your own home foreclosure, it’s crucial to have a clear unde
rstanding of the foreclosure process in Minnesota. So, before we proceed any further…
Understanding the Foreclosure Process in Minnesota
What is foreclosure anyway?
Foreclosure is a legal process that lenders initiate to repossess a property securing a loan when the borrower defaults on their payment obligations. This can be a challenging and stressful time for homeowners who are faced with the prospect of losing their property. However, it’s important to understand that foreclosure is not the end of the world and that there are steps you can take to navigate the process effectively.
Having a clear understanding of how foreclosure works in Minnesota can provide you with the knowledge and tools necessary to manage the situation in the best way possible. By familiarizing yourself with the foreclosure process, you can take proactive steps to protect your rights and interests and ensure that you come out the other end with the best possible outcome.
While foreclosure is never a pleasant experience, it’s essential to approach the situation with a level head and a clear understanding of your options. By seeking professional guidance and support and taking the necessary steps to protect yourself, you can navigate the foreclosure process with confidence and emerge stronger on the other side.
The Basic Stages of A Foreclosure
The foreclosure process can be a complex and overwhelming experience for homeowners. It involves several stages that vary depending on the state in which you reside. Understanding the process is crucial to knowing your rights and options.
Foreclosure procedures differ from state to state, and the two primary methods used by states to foreclose on a property are judicial sale and power of sale. In a judicial sale state, the lender is required to go through the court system to obtain a foreclosure order. In contrast, a power of sale state permits lenders to foreclose without court intervention.
If you are facing foreclosure in the Twin Cities area, don’t go through it alone. Our team is here to help you navigate the specific foreclosure process in your local area. Whether you prefer to call us at 612-293-3532 or reach out through our contact page, we are here to walk you through every step of the way.
Typically, a foreclosure process doesn’t reach court until three to six months of missed payments have elapsed. However, lenders usually send multiple notices to inform homeowners of their overdue or missed payments before initiating the foreclosure process. Keep in mind that while this is usually the case, it’s not always the rule. Therefore, it’s essential to be aware of your state’s foreclosure laws and timelines to avoid losing your home.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Sota Home Buyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Twin Cities, we can help you.
We buy houses in Twin Cities Minnesota like yours from people who need to sell fast.
Give us a call anytime 612-293-3532 or
fill out the form on this website today! >>
Another Foreclosure Resource For Twin Cities Minnesota HomeOwners: