MN foreclosure process:
1. A buyer purchases a home and gives a Mortgage to a bank. The home is used to secure the loan, if the borrower doesn't make the agreed to payments the bank can take the home away through the foreclosure process. Most mortgage agreements include a "power of sale" which allows the bank to sell the home, if the borrower does not make the payments as stipulated in the reams of paper signed at the closing.
2. If the buyer gets behind on payments or stops making them altogether, the lender can demand payment in full and begin the foreclosure process any time they want to. This is called the equitable redemption period and lasts as long as the lender will allow. The home owner could call the lender and try to work something out. Maybe make some payments, or give a date by which they can be caught up again.
Keep in mind that the foreclosure process is costly for the lender. It is hard to call the bank when they are calling and mailing and hounding for the payment but talking and cooperating may be the best way to retain ownership of the home.
3. If buyer can not make the payments or the lender will not accept anything less than what is owned right now, the foreclosure process begins, and the home owner does have the option of selling the home and using the proceeds to pay off the mortgage. The home owner has the option of giving the home back to the bank, which does not save the home but is less damaging to the home owners credit rating than a foreclosure is. (we call this a deed in lieu) In some cases the bank may accept less than what is owed on the property and allow what is called a "short sale"
4. If the lender starts the foreclosure process a notice of a sheriffs auction is publish to the public once a week for six weeks. During this process the borrower is notified, by delivery, once a week for four weeks that the home will be sold at auction.
5. The sheriffs auction is held. The property is sold or maybe not. The home owner does not have to leave the property because there is still another step.
6. The statutory redemption period begins after the auction, it can be as short as five weeks if the owner abandons the property. The definition of the abandonment is a legal definition and does not necessarily mean the owners left the property. Having the utilities shut off, windows broken, a missing front door, or police calls to the property because of trespassing or disturbances can constitute abandonment.
In most cases the redemption period is six months long, if the owner has a great deal of equity in the property it is 12 months long. During the redemption period the owner can pay everything they owe and all the costs associated with the auction and keep the home. They can sell the home during this period and pay off the mortgage.
7. After the six month or 12 month redemption period ends, the home owner has to leave the property. If the property was purchased during the sheriffs auction and was sold for more than the owner owed on it, the owner gets the excess. If sold for less than the owner owed on it then the lender can take legal action to collect the difference.
8. If the home was not sold at the sheriffs auction then it is most often listed by a Realtor who specializes in selling bank owned properties. These homes are usually listed at a price reflective of the market value of the home.
The bottom line is by signing the mortgage papers the buyer is agreeing to all of this. Banks are in businesses and they lend money to make money. There is also such a thing as mortgage fraud, and our new Attorney General is on a mission to get rid of mortgage fraud in Minnesota through stricter legislation. There are some serious flaws some where in our system. Research has shown the foreclosures rates are the higher in some neighborhoods than in others.
"quoted from St. Paul real estate blog.com"
Foreclosures for sale Links:
Hud home foreclosures www.best-assets.com
Hud and other foreclosures www.firstpreston.com
USDA Rural Development foreclosures www.resales.usda.gov