HF4542

Purpose

This bill updates Minnesota’s foreclosure process to modernize and expand how a home can be foreclosed. It introduces online foreclosures and a private selling officer option, adds new notice and consumer-protection requirements, and clarifies how redemption and tenant rights work. The goal is to provide more information to homeowners and tenants, improve transparency, and (in some cases) shorten or streamline the foreclosure timeline while protecting people who live in or own homes.

Main Provisions and What They Do

• Online foreclosure sales and private selling officer

  • Foreclosures can be conducted online or by a private selling officer (a licensed real estate broker or auctioneer) instead of only by the sheriff.
  • If a private selling officer is used, the mortgagee pays any fees; the private officer handles the sale, but the sheriff remains involved for certain duties.
  • After the sale, the private selling officer must share key details (property address, time and place, sale price, purchaser information, funds received, and a copy of the sale certificate) with the county sheriff.

• Notice requirements and remedies for improper notice

  • The bill strengthens how notice of sale must be mailed and what it must include.
  • If notice is not mailed as required, a notice requester can sue for damages, with damages capped by the equity or redeemable interest, and the suit must be filed within two years.
  • There is an exception to the damages rule if, at least 60 days before the end of the mortgagor’s redemption period, a copy of the sheriff’s certificate of sale is mailed to the notice requester.

• Notice content and required disclosures

  • Notices must include: names of all parties, original loan amount, date of the mortgage and where recorded, amount claimed due, a description of the mortgaged property, sale details (online site or private selling officer contact), redemption period length, and whether the property is a residential dwelling with a special vacate deadline.
  • For owner-occupied single-family homes, notices must specify the date by which the mortgagor must vacate if the mortgage is not reinstated or the property redeemed (vacate deadline is set as 11:59 p.m. on the date shown).

• Foreclosure advice and tenant notices

  • Foreclosure advice notices are required, including information on how to get help, who to contact for counseling, and links/phone numbers for resources such as the Minnesota Home Ownership Center and HUD.
  • Notices to tenants are included, explaining that lease terms generally stay in effect and outlining tenants’ rights during foreclosure, including how much rent may be owed and that they may have a redemption period or eviction protections depending on the case.

• Redemption rights and periods

  • The default redemption period remains six months, but under certain conditions the redemption period can be reduced (for example, to five weeks under judicial orders that determine certain property improvements).
  • Postponements by mortgagees and how they affect redemption periods are clarified, including notice requirements when a sale is postponed or rescheduled, with online sale reminders if applicable.
  • The mortgagor may postpone a sale if the property is homestead and has 1–4 dwelling units, subject to filing an affidavit and recording it in the counties where the mortgage was recorded. Such postponement can reduce the redemption period to five weeks, under specified rules.

• Installment sale provisions

  • When a mortgage secures installment payments, each installment can be foreclosed separately with the same general effects as if the entire debt were due, subject to certain limits on attorneys’ fees.
  • Proceeds are applied first to costs, then to the due installments with interest, taxes, and insurance, and any surplus goes to other lienholders and the owner of the equity.

• Certificates of sale and recordation

  • After a sale, the officer issues a certificate of sale with details about the mortgage, property, sale price, time/place, purchaser, and redemption terms.
  • If the redemption period is five weeks (as allowed in some cases), a court order must be attached to the certificate.
  • Certificates must be recorded within specific timeframes to finalize transfer of title after redemption expires.

• Purchase rights and other protections

  • The mortgagee or mortgagee’s assignee may submit a maximum bid and purchase the property at sale.
  • The mortgagee may also submit bids in advance for their own or related interests.
  • The law clarifies that nothing prevents the sale from complying with existing protections, and it emphasizes the importance of accurate sale disclosures.

• Fees and costs

  • If a private selling officer conducts the sale, the mortgagee pays the private officer’s fees; those costs cannot be charged to the mortgagor.
  • Attorneys’ fees for installment-sell foreclosures are limited to what is allowed for standard mortgages.

• General consumer protections and assistance

  • The bill stresses not to fall for foreclosure scams and directs people to contact counseling services for help with options, including short sales or repayment plans.

Significant Changes from Current Law

• Introduction of online foreclosure sales as a standard method.
• Creation of a private selling officer option, with mortgagee-funded fees and a defined process for handoff to the sheriff.
• Expanded and standardized notice requirements, including explicit content for notices to homeowners and tenants.
• Stronger remedies for failure to mail notice, including damages and a defined time limit for bringing actions.
• Expanded foreclosure education and outreach provisions, with formal guidance to homeowners and tenants.
• Adjusted redemption rules, including the possibility of reducing the redemption period to five weeks under certain judicial orders or for homestead properties when postponing is used.
• Clearer procedures for postponement, including notice requirements and record-keeping associated with the postponement.
• Detailed rules for certificates of sale and the recording process to effectuate transfer after redemption.

How It Could Affect Key Groups

• Homeowners facing foreclosure: More information, potentially more protections, and options like counseling; however, online and private-officer sales could affect timing and processes.
• Tenants: Explicit notices and protections about lease terms and rights during foreclosure; clearer guidance on eviction and redemption timelines.
• Mortgagees: Greater flexibility to conduct foreclosures online or via a private officer, with the mortgagee bearing the associated costs.
• Local government and sheriffs: New procedures for handling online sales and transmitting sale data to the sheriff; adjusted timelines for recordation and notices.

Relevant Terms - online foreclosure sale - private selling officer - sheriff’s mortgage foreclosure sale - notice of sale / notice content - redemption period - vacate deadline - foreclosure advice notice - foreclosure prevention counselor - Minnesota Home Ownership Center - HUD (Housing and Urban Development) - Be careful of foreclosure scams - foreclosure notices to tenants - postposed sale / postponement - sworn affidavit (postponement by mortgagor) - certificate of sale - recordation - six-month redemption period - five-week redemption period - installment sale redemption - fees paid by mortgagee - sale proceeds and surplus funds - lienholders / purchasers / assignees - online sale venue website (580.31)