Are you struggling to make your mortgage payments?

Are you worried that loss of income or increases in the cost of food, fuel, and other needs are going to make future payments difficult?

Have you already been through the foreclosure process?

Given current economic conditions, there are many Minnesotans dealing with these issues every day. Foreclosures are on the rise, and many homeowners do not know where to turn for help. Many do not realize that there are other alternatives to foreclosure.

MinnesotaFaceOfForeclosure.com was designed by your local REALTOR® association to provide credible resources for homeowners in need in Minnesota. Whether you are looking to stay in your home or move on, select from one of four situations below to find local resources to help you.

If you have not yet missed a mortgage payment, but might in the future, visit one of these links for more information:

Community Housing Partnership

Non-profit organization, providing pre-foreclosure and foreclosure counseling to residents of Olmsted County, Minnesota.

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Lutheran Social Services

Non-profit organization providing pre-foreclosure and foreclosure counseling to residents outside of Olmsted County, Minnesota.

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Minnesota Home Ownership Center

Non-profit provider of information and resources aimed at helping Minnesotans begin and maintain home ownership.

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If you have already missed one or more mortgage payments, visit one of these links for help and more information:

Minnesota Foreclosure Process

A PDF diagram, explaining the process of foreclosure by advertisement in Minnesota.

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Community Housing Partnership

Non-profit organization, providing pre-foreclosure and foreclosure counseling to residents of Olmsted County, Minnesota.

Learn More

Lutheran Social Services

Non-profit organization providing pre-foreclosure and foreclosure counseling to residents outside of Olmsted County, Minnesota.

Learn More

Minnesota Home Ownership Center

Non-profit provider of information and resources aimed at helping Minnesotans begin and maintain home ownership.

Learn More

Making Home Affordable

Part of the Obama Administration’s Financial Stability Plan, this is a plan to stabilize our housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

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HUD (U.S. Department of Housing & Urban Development)

HUD’s mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination.

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Do you want to sell your home, but owe more than it is currently worth? Visit one of these links for more information:

Short Sales

What are they, and how do they work?

– REALTOR.org “Field Guide to Short Sales”

Southeast Minnesota Association of REALTORS®

Find a REALTOR® in Southeast Minnesota who specializes in Short Sales.

Note: It is each homeowner’s responsibility to select an individual agent considering such issues as training, experience, representation and professional certifications. This site makes no representations or guarantees on behalf of any individual agent.

Minnesota Association of REALTORS®

Find a REALTOR® in your area who specializes in Short Sales. Minnesota Association of REALTORS® – List of local Associations

Note: It is each homeowner’s responsibility to select an individual agent considering such issues as training, experience, representation and professional certifications. This site makes no representations or guarantees on behalf of any individual agent.

If you’ve already experienced a foreclosure, visit one of these links for more information:

Lutheran Social Services

Non-profit organization providing pre-foreclosure and foreclosure counseling to residents outside of Olmsted County, Minnesota.

Learn More

Minnesota Home Ownership Center

Non-profit provider of information and resources aimed at helping Minnesotans begin and maintain home ownership.

Learn More

In Minnesota, a foreclosure sale must take place between the hours of 9 am and sundown at a public place. Since the sheriff conducts the foreclosure sale, the sale typically takes place at the sheriff’s office but it may be in another location. The exact time, date and location of the intended sale must be published in the Notice of Sale.

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In a simple foreclosure that is uncontested by the borrower and occurs outside of the judicial system, a foreclosure can occur in just 60-to-90 days in Minnesota. However, most foreclosures in Minnesota take significantly longer than that.

You can also download the Minnesota Foreclosure Process, a PDF with more information.

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To initiate a foreclosure by advertisement, the creditor must prepare a notice of mortgage foreclosure sale. The notice must specify the name of the mortgagor and of the mortgagee, the original principal amount secured by the mortgage, the date of the mortgage and when and where recorded, the amount claimed to be due under the mortgage including taxes paid by the mortgagee, a description of the mortgaged premises, the time and place of sale and the time allowed by law for redemption by the mortgagor. Once the notice has been prepared by the creditor, it must be published in a qualified newspaper in the county where the mortgaged property is located for six weeks prior to the sale. The notice must be personally served upon the person in possession of the mortgaged premises at least four weeks before the sale. It must be served in a manner similar to that required for service of a summons initiating a civil action.

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If the foreclosure sale does not bring in enough money to pay off the debt, the creditor may be able to obtain a deficiency judgment against the mortgagor. The foreclosing entity (usually the first lien holder, but not always) can NOT seek judgment if the foreclosure was pursued by advertisement.  HOWEVER, any other lien holders MAY.  There is no difference if the property has a 6 or a 12 month redemption period. If the statutory redemption period is six months, however, such a deficiency judgment can be obtained against the mortgagor only if the foreclosure was by action. No deficiency judgment can be obtained against the mortgagor if the redemption period is six months and foreclosure was by advertisement. If the redemption period is twelve months, however, a deficiency judgment can be sought. Finally, even if the redemption period is six months, a deficiency judgment can be sought against any guarantors of the promissory note.

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Yes, Minnesota provides borrowers with a statutory right of redemption. The redemption period ranges from only five weeks in cases where the borrower has abandoned the property, to one year in cases where the borrower owes less than two-thirds of the original principal amount of the loan. If the owner has not abandoned the property and owes more than two-thirds of the original principal amount of the loan then the redemption period is six months.

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Deed-In-Lieu of Foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.

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In the event that the default is not resolved, the lender may take action to force a sale of the property, known as the Sheriff Sale. The borrower will either receive a notice of sale four weeks before the Sheriff Sale, or in some cases, a summons to court, where the lender will request the court to authorize the Sheriff Sale. The sheriff for the county where the property is located will conduct a Sheriff Sale in a public place. Once the Sheriff Sale has occurred, it may be difficult to save the home. Generally, the mortgage can no longer be “cured” or “worked out,” but rather a whole new loan must be obtained to cover the cost of the mortgage, late fees, attorney’s fees, etc. Obtaining new financing for a loan that is larger than the original loan (due to fees) is difficult and may be compounded by damage to the borrower’s credit caused by the foreclosure. If at all possible, borrowers are encouraged to take action to resolve the defaulted mortgage before the Sheriff Sale. After the Sheriff Sale, the borrower does have some options for recourse, however, during the “redemption period.”

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Recent changes to Minnesota law allow a borrower to postpone the Sheriff Sale for five months. The request can be made only once and must occur at least 15 days before the scheduled sale date. Postponing the Sheriff Sale under this law reduces the redemption period from six months to five weeks.

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After the Sheriff Sale, the borrower typically has a redemption period of six months and can remain in the home during this period. During the redemption period, the borrower may attempt to refinance the home through a new mortgage. Remember, however, that the borrower may be responsible for fees incurred during the foreclosure process in addition to the amount of the defaulted loan. Alternately, the borrower may attempt to sell the home in order to take advantage of any equity that he/she has built up in the home. If the borrower has been unable to refinance or sell the home after the six-month redemption period, he/she must vacate the property. The bank can reduce the redemption period to just five weeks if the property is abandoned

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short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency .

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Short sales are a type of settlement, and they adversely affect a person’s credit report, though the negative impact is typically less than a foreclosure. Like all entries, except for bankruptcy, short sales remain on a credit report for seven years. Depending upon other credit information, it is typically possible to obtain another mortgage one-to-three years after a short sale, or less if the borrower is current at the time of the sale.

While lenders sometimes forgive the remaining loan balance, other lien-holders likely will not. Further, it is common for a lender to omit updating mortgage balances zero balance after a short sale. However, willfully misrepresenting information on a credit report can constitute libel in some jurisdictions, and lenders may be sued in civil court for engaging in this behavior.

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A foreclosure remains on your credit report for seven years, but its impact to your FICO® score will lessen over time. While a foreclosure is considered a very negative event by your FICO® score, it’s a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO® score can begin to rebound in as little as 2 years. The important thing to keep in mind is that a foreclosure is a single negative item, and if you keep this item isolated, it will be much less damaging to your FICO® score than if you had a foreclosure in addition to defaulting on other credit obligations.

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If you have a foreclosure in your credit report it takes some time before you qualify for a mortgage after foreclosure again. Fannie Mae sets few norms which the lenders are expected to follow. Usually you will not be able to take out a mortgage after foreclosure, four-to-five years from the date of foreclosure. However, this time period can be reduced to three years at the most if the borrower is able to prove to the lender that the missed payments were due to reasons that are beyond the control of the borrower. For instance, death of a homeowner is a valid reason for getting approved for a mortgage after foreclosure. Similarly, if you have relocated to a different place for employment purposes and if the house failed to get sold within a stipulated time period, you can get a mortgage approved much before the “waiting period” when you are repairing your credit rating. Lenders are expected to adhere to the standards set by Fannie Mae. If they fail to do so, they will not be allowed to pack the mortgages and sell them off to Fannie Mae .

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