Minnesota Foreclosure Process

Foreclosure is a legal process initiated by a mortgage holder in order to terminate the rights of a property owner or borrower in the event of defaulted mortgages. The Minnesota foreclosure process may involve deeds of trust or defaulted mortgages in one of two types of legal proceedings.

Documentation

• During the loan documentation process, a borrower may agree that the lender holds ownership of the property until the mortgage loan is paid in full. In this situation, the lender technically owns the property through a deed of trust. Other types of property loans involve a mortgage deed. In this case, the borrower is the legal owner of the property, but the home is listed as security for the mortgage loan.

Types

• A foreclosure in Minnesota may be either judicial or nonjudicial, depending on whether the property is the security for a mortgage loan or if the lender is listed as the owner. In a judicial foreclosure, the lender files a legal complaint against the borrower with the local court after the borrower defaults on the mortgage loan. The court issues a decree of sale for the property.

  No court action is necessary in a nonjudicial foreclosure as the lender is listed as the owner on the deed of trust. A deed of trust likely contains a power of sale clause that specifies the foreclosure process if the borrower defaults on the loan. In Minnesota, a nonjudicial foreclosure may only take place if there is no current lawsuit to collect on the mortgage and if the mortgage and any new lender assignments have been recorded.

Notice

• Minnesota law requires that a borrower be notified eight weeks in advance of a nonjudicial foreclosure of a homestead. Specific sale dates, notices and locations outlined in the power-of-sale clause must also be followed. For any type of foreclosure in Minnesota, recording a notice of sale in the county where the property is located is a requirement. The notice of sale must list the names of both the borrower and lender, a description of the property, the date of the mortgage, the original amount of the loan, the amount of the default and the place, date and time of the foreclosure sale.

Foreclosure Sale

• The foreclosure sale process in Minnesota is conducted by the sheriff of the county where the property is located in accordance with the date and time stipulated in the notice of sale. The sheriff is also obligated to read an itemized statement filed by the lender outlining the amount due at the time of the sale. Foreclosed properties sell to the highest bidder.

Redemption

• Purchasers of foreclosed properties in Minnesota receive a certificate of sale at the time of purchase. The original borrowers have up to one year to redeem the foreclosed property by paying the past-due loan amount.