Minnesota Foreclosure Process Timeline
About the Foreclosure Process in MN
The foreclosure process in Minnesota is a multi-step procedure that spans several months. It's essential for prospective home buyers to comprehend the process, which typically consists of three main phases.
Pre-foreclosure Period: In Minnesota, a foreclosure initiated by the court begins with the lender notifying the borrower via a notice of default (N.O.D.), often dispatched as a letter by the bank representative to the homeowner. This notice is recorded by the county. The lender then files a court action, and if ruled in favor of the lender, a sale is scheduled. Websites such as Zillow and Realty Trac obtain this information from county records and make it publicly available. Most Minnesota foreclosures, however, are handled out of court through a power-of-sale clause in the mortgage, requiring the lender to send a default notice before scheduling a sale. In either scenario, the borrower can stop the foreclosure by paying the default amount and associated fees before the foreclosure sale.
Notice of Sale/Auction: The notice of sale or auction includes various details such as borrower, owner, and lender names, original loan amount, mortgage date, default amount due, property description, sale time, location, and redemption period. This notice must be published for six weeks, with occupants receiving it in person at least four weeks before the sale. The foreclosure sale, conducted by the county sheriff or deputy, occurs between 9:00 a.m. and sundown at a public location. Anyone can bid, but typically, the lender's representative is often the highest and sometimes only bidder. The winning bidder must pay the total amount in cash or a cashier’s check. The sheriff can postpone the sale by publishing a notice in the same newspaper where the original notice was issued. After the sale, the winning bidder receives a certificate of sale, and the redemption period commences.
Redemption Period: During this period, which typically lasts six months (but can extend to 12 months for some property types and mortgages), the borrower has the opportunity to redeem the property by paying the winning bid amount plus interest and applicable costs. If the winning bid is lower than the home's value, investors may approach the homeowner to purchase the deed or the homeowner may try to sell the house to cover the redemption price and prevent foreclosure.
Real Estate Owned (REO): Once the redemption period ends, the entity holding the sale certificate, often the bank, becomes the new homeowner and can take possession of the house. If occupants remain, the new owner must go through the eviction process. Following this, the property is officially listed for sale as a Real Estate Owned (REO) property by the bank's loss mitigation department. This listing occurs through contracted Minnesota real estate agents.
If you or someone you know is navigating foreclosure in the Twin Cities or seeks further information on foreclosures, reaching out to the REMAX Professionals Brian Zimpel and speak to a foreclosure specialist and get the valuable guidance you need.
Explorer selling during a foreclosure and starting fresh with a contract for deed.