How Foreclosure Works in Minnesota

Both. A mortgage that contains a power of sale may be foreclosed "by advertisement" (a sheriff's sale without a court case) after a default, as long as no lawsuit to collect the debt is pending and the mortgage and all assignments are recorded. Mortgages may also be foreclosed by court action under Chapter 581. In either case, the homeowner generally keeps a redemption period after the sheriff's sale.

For an owner-occupied home of 1 to 4 units, before the foreclosure is started (before the notice of pendency or lis pendens is recorded) the lender must give the homeowner a notice that free foreclosure prevention counseling is available and that the homeowner's contact information will be sent to an approved counseling agency. For a foreclosure by advertisement, six weeks' published notice of the sale is required, and a copy must be served on the occupant, like a court summons, at least 4 weeks before the sale. The notice must state the amount claimed due, the time and place of sale, the redemption period, and, for an owner-occupied single-family home, the date the owner must move out if the mortgage is not reinstated or the property redeemed. Owner-occupants of 1 to 4 unit homes must also be given a separate "Help For Homeowners in Foreclosure" advice notice and a notice of redemption rights with the foreclosure notice.

For a foreclosure by advertisement, the statute requires six weeks' published notice before the sale and personal service on the occupant at least 4 weeks before the sale. For an owner-occupied home of 1 to 4 units, a servicer generally may not refer the loan to an attorney for foreclosure, or hold the sale, while a timely loss-mitigation application is pending (small servicers are mostly exempt). A homestead owner may postpone the sale once — for 5 months if the redemption period is 6 months, or 11 months if it is 12 months — by recording an affidavit at least 15 days before the sale, which shortens the redemption period to five weeks. After the sale, the redemption period (usually 6 months) runs before the owner must leave.

Yes. In a foreclosure by advertisement or by court action, the mortgage is fully reinstated and the foreclosure must stop if, at any time before the sale, the homeowner (or a junior lienholder or anyone on their behalf) pays the amount actually in default when the foreclosure began, plus insurance, delinquent taxes, interest, publication and service costs, limited attorney's fees (not more than $150 or half of the fees allowed by Minn. Stat. § 582.01, whichever is greater) and other lawful costs. The lender must tell the homeowner the reinstatement amount within three days of a request, but does not have to postpone the sale for a request made less than three days before the sale.