Are you facing foreclosure in Minnesota?

Foreclosure can be scary to go through. Most people never thought that they would be in this position. They never thought that they would be losing their home. This blog post will let you know what you should do and the actions that matter and don’t matter. Let’s learn more about the foreclosure process in Minnesota.

Minnesota Foreclosure Timeline:

Typically a person that has mortgage will start with missing one mortgage payment. If you miss one payment and then can make it up the next month and you go back to making your payments normally, no big deal. Your credit will have a missed payment on it but as long as your not applying for anything credit wise it will fall off over time. That is the good scenario.

The bad scenario of the Minnesota foreclosure process is when someone knows that they don’t have the money but yet works harder and harder to try to make up the payments but slowly and surely they can’t.

First missed payment: The bank will start calling. This is a robocall that will put you into their collection department if you pick up. You will also receive mailings from the bank requiring immediate action to contact them. If you don’t have the money to make the mortgage payment and past mortgage payments, you can see if they will modify your mortgage. The bank is a system of people and computers. If you find out the contact information to modify your mortgage, you will need to contact them and get assigned a case number or file number. You may also get a representative.

Even if you get a representative, the banks system will still say that your mortgage is late and you will still be getting calls that you still don’t have the money for. People tend to just ignore these calls.

Second missed payment:  The calls will start to increase in volume. I believe at one point, I was getting 18 to 20 calls back in 2008. The calls and the mailings will increase, but no one is coming to your door. At this point, the bank may schedule your Sheriff Sale date.

All banks are different, and some do it at 90 to 120 days past due and others I have heard of didn’t do it for two years. That was a luxury home, and they know that they take a more significant loss on luxury homes, so they hold out longer to handle it. Your home may show up on Zillow under the pre-foreclosure tab. This means that friends and neighbors may know you’re in foreclosure.

Does it matter that you’re in foreclosure? Not really to tell the truth. Very important people that day these days get a day attention then everyone is back to their busy lives. Most people forget about what has happened to people. What matters is what you do at this point to save your credit!

What is a Sheriff Sale in Washington County?

When a bank schedules a Sheriff Sale in Washington County Minnesota, they will have attorneys file paperwork with County that you live in for a court date.

This court date is the way that the bank gets the property back. Any cash buyer can actually bid on the property at the sheriff sale. Not many do because of the redemption period.

What is a Redemption Period in Washington County Minnesota?

Minnesota is actually a pretty friendly state when it comes to some of the laws. As for the weather, it is fricken cold in the winter. The Redemption period for a home in Minnesota is 6 months. That means that you have 6 months to payback the full mortgage amount and interest and you can keep the home. This most like won’t happen but you can still sell or short sale the home during this period.

12 month redemption period applies to land with more acreage. Click here to read more about that.

What is a Short Sale in Minnesota?

A short sale is not short in time that it takes. This is the biggest misconception of what a short sale in Minnesota is. A short sale is when you work with a Real Estate Agency like Woodbury Real Estate Group to help you sell the home and negotiate with the bank for less than what you owe agreeable sale price.

In simple terms, we get the bank to agree to sell the home for less than what you owe.

Why do Banks agree to Short Sales In Minnesota?

The bank is a system of computers and people. What the bank cares about is numbers. Your home is an asset that is not performing (Not Profiting them). What the bank will do is look at how much your home is worth and what is insured against the mortgage. IF your agent brings them the amount that meets their numbers, they agree to the short sale. If the amount brought to them doesn’t meet these numbers, they will foreclose, rehab the house and flip it for a profit.

You have to remember, you were paying for mortgage insurance or had a government-backed loan so the banks are not losing money.

Advantages of Short Selling Your Home in Washington County Minnesota?

  1. The bank may have a program that allows you to get money to agree not to damage the property and do the short sale. Back in the recession days this was called HAFA and you would get $3000. That program went away but banks still do have some programs. When homeowners move out without knowledge to the bank, damage like a pipe bursting and flooding the home make the home a pain for the bank to clean up in foreclosure. They would rather agree to receive less paid back on the short sale and give you some than have to clean up a water damage property.
  2. You know what is going on each step of the way. Your Real Estate Agency will typically negotiate or have a law firm negotiate the short sale and be in constant contact with the bank. When you foreclose you will be able to see your sheriff sale date by going here for Washington County. In redemption period the bank’s foreclosure agent may try to contact you to move early but other than that your just there till the sheriff shows up. You have 24 hours once they put the notice on your door. Don’t wait for that.
  3. If the short sale occurs with the least amount of missed mortgage payments, you will be doing less damage to your credit.

How does a Short Sale Effect my credit?

A short sale and a foreclosure are looked at differently by people that your looking to borrow money from. Most car loans want to borrow you money so they may just charge you higher interest rates and the same goes for credit cards. Renting will up to the landlord, but as the recession increases this time or the next time, landlords have look at people that are going through this.

When can I buy a Home after a Short Sale or Foreclosure in Minnesota.

Most lenders will require 3 years of no missed payments on all other credit that you have. This is not a bad thing since if you foreclosed on a home that you may overpaid for, this time you can buy a foreclosure and get on the right side of the up and down cycles of the economy.

Can you buy a home if your in foreclosure or doing a short sale?

You can’t buy a home with missed payments. That being said if the home/mortgage is only in your name and your married, your spouse can buy. If both of you are on the mortgage than you will have to rent or get a non-occupying person to sign on the loan for you. This will be up to your mortgage officer and mortgage company. If you need help with this, call us and we can set you up with someone.

There is Tax that may have to be paid on the gain you made?

Hopefully you can sell your property right now since there is still a shortage of homes for sale and just redeem it. If you do have to sell it in a short sale you may have to pay taxes on the portion the bank forgave. The government used to have a debt forgiveness act that allowed for homeowners to not have to be taxed on it. That expired in 2016. Call an accountant before agreeing to a short sale.

What is the best choice when facing foreclosure in Minnesota?

The best choice is to call someone like Dale with the Woodbury Real Estate Group and get the facts. Knowledge can help you decide how to proceed. Maybe you don’t want to short sale and just not pay rent for 8 months? Maybe you want to redeem the property with a short sale? Maybe you want to buy in your spouses name while short selling your home? There is so many options you have if you pick up the phone or send an email. We’re here to help 612.715.6464 or Dale@Wregmn.com.