Foreclosure Law in Minnesota
In New Ulm, Minnesota, foreclosure is a process through which a lender that issued a mortgage loan retakes possession of the property that was bought with the mortgage in the event that the borrower has defaulted on his or her payments.
If an ordinary consumer faces foreclosure, it normally involves a home that was purchased with a mortgage from a bank. The bank will normally try to sell the house at a public option, with the hope of at least covering the remaining debt, to avoid taking a large loss.
Like every other state in the U.S., Minnesota authorizes homeowners facing foreclosure to opt for a foreclosure by judicial sale. This is a procedure through which a court oversees the sale of the house by the lender. The purpose is to see that the lender takes reasonable steps to notify the public of the auction, and other steps to ensure that the house sells for the highest price possible. This is meant to protect the borrower, making it less likely that they'll have to pay a large deficiency judgment (the remaining amount due on the mortgage if the house sells for less than the remaining balance).
In some states, original mortgages are regarded "non-recourse" loans. This means that once the house or other property that secured the mortgage is sold, and if it sells for less than the balance of the mortgage, the lender has to absorb the loss, and cannot sue the borrower for the remainder. This normally does not apply to second mortgages or refinanced loans.
How to Possibly Avoid Foreclosure in New Ulm, Minnesota
It's extremely important that you engage in continued communication with your bank. Lenders are surprisingly willing to make accommodations if it means they still get paid something, but in order to accommodate your case, they have to know about it.
You must keep in mind that banks are in the business of lending funds, not flipping property: the bank doesn't really want your house. To that end, they'll occasionally go to great lengths to accommodate your financial situation, whatever it may be. For banks, foreclosure is a last resort.
It's possible that your lender is willing to negotiate a plan that results in temporarily-lower payments on your mortgage, particularly if this means that they will be able to get some payments, instead of none at all.
In Minnesota, some buyers have no choice but to resort to a short sale. This is simply the sale of the house, and using the funds to pay off the remainder of the mortgage. One benefit of a short sale is that, if the house sells for less than the mortgage balance, the remaining debt is absolved, and the borrower is free and clear.
Can a New Ulm, Minnesota real estate attorney help?
If you live in New Ulm, Minnesota and believe that your house is in danger of being foreclosed, you may have more options and protections than you think. You may not know what all of them are, but an accomplished real estate lawyer probably will.