Quick Facts
– Judicial Foreclosure Available: Yes
– Non-Judicial Foreclosure Available: Yes
– Primary Security Instruments: Deed of Trust, Mortgage
– Timeline: Typically 60 days
– Right of Redemption: Yes
– Deficiency Judgments Allowed: Yes
In Minnesota, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on the loan in the event of their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines.”
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place, and terms of sale, then the specified procedure must be followed. However, in Minnesota, a non-judicial foreclosure may only occur if:
- No lawsuit to collect on the mortgage is already underway.
- The mortgage and any mortgage assignments to new lenders have been recorded.
- A notice has been given eight (8) weeks before the foreclosure on a homestead.
Strict Notice Provisions Must Be Satisfied
- A notice of sale, containing the borrower and lender(s) name, the original loan amount and the current amount of default, the date of the mortgage, a description of the property, and the time, place, and date of the foreclosure sale, must be recorded in the county where the property resides.
- The county sheriff where the property is located must conduct the sale on the date specified in the notice of sale. At some point during the sale, the sheriff must read an itemized statement, which has been filed by the lender, of the amount due at the time of the sale. The property is sold to the highest bidder, who will receive a certificate of sale.
- Lenders may pursue a deficiency judgment, but it is limited to the amount of the fair market value of the property and the unpaid balance of the original loan. Borrowers have up to one (1) year to redeem the property by paying the past due amount on the loan.
