Foreclosure Law in Minnesota

In North St. Paul, 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 typically involves a home that was purchased with a mortgage from a bank. The bank will typically 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 permits 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 typically does not apply to second mortgages or refinanced loans.

How to Possibly Avoid Foreclosure in North St. Paul, Minnesota

It's quite 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.

Because banks don't specifically enjoy foreclosing, they will probably be willing to work out an alternative payment plan with you, if necessary. Nonetheless, if you think that this might be needed in the near future, you should contact your lender immediately. The sooner they know about it, the more options you have.

As a last resort, you might consider a "short sale," which results in loss of the home, but it typically leads to a great deal of the debt on the mortgage being forgiven. Typically, a short sale in Minnesota involves selling the house for whatever price it can fetch. The proceeds from the sale go to the lender, and if it sells for less than what's left on the mortgage, the balance of the debt is forgiven.

Can a North St. Paul, Minnesota real estate attorney help?

If you live in North St. Paul, 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 efficient real estate lawyer probably will.