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On June 15 of last year the State of Minnesota changed the Minnesota foreclosures laws. These changes are meant to combat the snowball effect of lowered property values that occurs in a neighborhood when a home owner is forced to walk away from his or her home, leaving it in the hands of the mortgage holder. The new regulations affect homeowners, lenders and municipal governments.

Under the new Minnesota foreclosures laws, homeowners who are in arrears on their property and have been given a forced sale date can apply to have the sale date postponed by five months. Before these changes were made the only party with the authority to postpone a forced sale was the mortgage holder. Lawmakers hope that homeowners who have fallen into arrears after losing their jobs in these days of uncharacteristically high unemployment can use the additional time to get back to work and bring their mortgage payments current.

This new solution to Minnesota foreclosures is not always appropriate, depending upon the homeowners circumstances. But for those with a reasonable chance of bringing their mortgage back into good standing, it does provide additional time for homeowners faced with a forced sale to avoid having to either pay the balance of the mortgage outright within six months of the sale date or declare bankruptcy.

The criteria to qualify for and secure a forced sale date postponement are relatively easy to meet. The option is only applicable to homestead residences. Under law, only one homestead residence is permitted per resident. The homestead property can have from one to four units and must be the owners primary residence.

To take advantage of the postponement option, homeowners must have been served with a forced sale date. Once served the homeowner must complete an Affidavit of Postponement and file it with the relevant county clerks office and the office of the sheriff who is to conduct the auction sale. A copy must also be provided to the lawyer handing the foreclosure for the lender. These steps must be completed no later than 15 days before the forced sale date.

The redemption period refers to the six months following the forced sale of a mortgaged home. By the end of the redemption period the mortgage, less the proceeds of the forced sale, must be paid in full or the mortgage holder may force the mortgagee into bankruptcy. For homeowners considering taking advantage of the 5 month postponement option, it is essential that they get the mortgage current within the postponement period.

Homeowners who avail themselves of the postponement option have the redemption time allotment reduced to 5 weeks from the usual 6 months. This was required by the mortgage holders (that is to say, the banks and brokers). Homeowners who fail to bring their mortgage up to date within the 5 month postponement period will have their homes sold and must pay the remaining balance within 5 weeks of the sale or face personal bankruptcy.

Under these new Minnesota foreclosures regulations, no homeowner may request a second postponement under any circumstances. This applies even if the mortgage was successfully brought up to date within the postponement period. This means that if the homeowner gets behind on their mortgage a second time, only the lender can authorize the postponement of a forced sale date

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