Minneapolis Real Estate

Foreclosure is the process used by a lender to legally repossess a property if the borrower fails to make mortgage payments on time. 

These pages provide an overview of the process as it occurs in Minnesota. They are designed for sellers and buyers of foreclosed properties.

You may find it helpful to view foreclosure as a process:

• Pre-foreclosure
• Default
• Sheriff's auction
• Real-estate owned (REO) stage

Part 1: Pre-foreclosure

If you are looking to buy or sell foreclosure property, do your homework.

Foreclosure sales are complex business transactions. In this arena, buyers and sellers make major financial decisions involving significant risk. We offer answers to common questions about preforeclosure, foreclosure and short-payout sales. If you want to discuss the topics in more detail, call Realtor Fritz Von Yeast at 612-965-2212. 

Having worked many deals, we offer this advice:

If you are facing foreclosure, be proactive. Once set in motion, the foreclosure process will continue, and your options will decrease steadily over time. Early in the process, your lender may work with you to restructure your debt or modify your loan terms; the government may have counseling programs available to help; you may be able to sell your property privately and walk away with equity, or short-sell the property and salvage your credit; or you may be able to find additional sources of funding. As the process continues, it often becomes harder to use these resources and opportunities. Be proactive.

If you are buying a foreclosed property, be realistic. There is profit potential in the right situations. But foreclosure transactions aren't a fast easy route to wealth beyond avarice. You'll work hard on foreclosure sales and earn what you receive. The next time you see a "too good to be true" quick-buck foreclosure scheme being sold on late-night cable, keep a grip on your checkbook. Concentrate instead on gaining good process knowledge; a clear picture of your subject property’s foreclosure status; an understanding of the liens involved and how they will be retired; accurate pricing data; sound models for buying and selling; a good idea of who the players are, and how they interact; and more. The more you learn, the more you'll earn. Be realistic.

The process starts with pre-foreclosure.

In Minnesota, if you miss a mortgage payment, your lender will usually contact you by letter. After several missed payments, the lender may send a borrower information package and/or demand letter formally notifying you to pay up, or it will start the foreclosure process (and accelerate your mortgage, so that it is due and payable immediately).

Pre-foreclosure is the period between the time when the lender notifies the borrower that it will file a foreclosure lawsuit and notice of default in the public record, and the time when the property is sold at auction. During pre-foreclosure, the borrower’s mortgage is in default, but the lender hasn't started the formal foreclosure process.

During this period the homeowner may be able to prevent foreclosure by:

If a homeowner faces serious financial hardship, and has limited equity, he/she can sometimes work with the lender to arrange a short-payoff sale. See Part 3 for more detail about real estate short sales.  

Preforeclosure is an emotional time filled with uncertainty for most homeowners. Expert advice is critical.

When seeking professional guidance, contact someone who is experienced and reputable – someone who will put your interests first. Be sure that you understand the information that the professional provides completely before choosing a course of action. Foreclosure can impact your finances and credit for many years.

If you want to invest in pre-foreclosure property, call me. You may be able to purchase the home (1) from the homeowner during the interval between missed payments and the sherrif's auction, (2) from the homeowner with the approval of all secured lienholders, or (3) from the primary mortgage lender if the homeowner surrenders the deed to the lender in lieu of foreclosure.

The pre-foreclosure sales process can be challenging and time-consuming, with hidden risks.

Read Parts 2 and 3 for more detailed information, and call the Real Estate Foreclosure Specialist, Fritz Von Yeast at 612-965-2212 for assistance.

Part 2 – Foreclosure process in detail

This information is provided for general educational purposes only. It is not legal advice. If you have legal or financial questions concerning foreclosure, contact your attorney or tax advisor. The author does not warrant the information's accuracy or completeness, and strongly advises the reader to gain competent professional guidance before making any real property buying or selling decisions.