Foreclosure is the process through which the lender in a mortgage takes ownership and/or possession of the property that secured the original loan. This happens when a debtor in Luverne, Minnesota has repeatedly failed to make their payments. When a house is foreclosed, it is usually sold at auction shortly thereafter. This is because banks usually want to get rid of the property as soon as possible, even if it means losing some money, and an auction is an easy way to do this.

In all states in the United States, including Minnesota, foreclosure by judicial sale is an option. This allows the sale to be conducted under the supervision of a court, to ensure that the bank makes a good faith effort to get a fair price, and that the proceeds above and beyond the balance of the mortgage (if there are any) go back to the debtor. In some states, original mortgages are "non-recourse loans," meaning that the lender can only recover ownership of the house in the event of default. If the house is now worth less than the balance of the mortgage, the lender has to take the loss. You should speak with a Luverne, Minnesota lawyer to see if this state is one of them. However, it is almost always the case that this protection does not apply to loans which have been refinanced.

How Can I Avoid Foreclosure in Minnesota?

First and foremost, you should not ignore the possibility of foreclosure. Failing to respond to collection calls from your lender will not make the problem go away. As unpleasant as this might seem, you should stay in contact with your creditor, and be honest with them. One should remember that banks generally don't want to take your house in Luverne. They issued your mortgage expecting to earn a profit on the interest. Taking possession of, and selling, your house is a last resort for them. Therefore, if you are honest with them about your financial situation, they are likely to make reasonable accommodations to prevent you from defaulting.

If no deal can be worked out, or the mortgage payments have become prohibitive, you might consider a "short sale". While the lender has to consent to it, many will take a moderate loss if it means avoiding foreclosure (which lenders generally treat as a last resort). This allows you to sell the house for whatever price it can fetch on the current market, and hand the proceeds over to the bank. If the sale nets less than the balance, some or all of the deficiency might be forgiven. There is also the option of a "short refinance," which forgives a significant portion of your mortgage debt, and refinances the rest.

How Can A Luverne, Minnesota Attorney Help?

If you are facing the possibility of foreclosure, a good Luverne, Minnesota real estate attorney can help. At the very least, they will be able to inform you of your legal options.