Thursday, May 21, 2009

Personal Deficiency Judgments After a Foreclosure in Minnesota

Many homeowners that are facing foreclosure assume that the Sheriff's sale is the end of the process... that after the house is sold, their personal financial responsibility for the house and any payments are done.

THIS MAY NOT BE TRUE!

In Minnesota - if a house is sold at the Sheriff's sale - and the sale price isn't enough to cover all debt against the property - there may be PERSONAL financial responsibilities for the homeowner(s).

There are specific situations in MN where lien holders can seek a personal deficiency judgment, - in plain English: sue a consumer - for unpaid debt after a foreclosure.

The Housing Preservation Project, in cooperation with the Minnesota Home Ownership Center, and the Volunteer Lawyers Network, has put together a fact sheet that outlines what can happen in Minnesota if the Sheriff's sale price doesn’t cover all outstanding debt against the property.

The fact sheet covers the different types of foreclosure - including the difference between a foreclosure by advertisement and a foreclosure by action - and its effect on judgments. In addition, the fact sheet explains what can happen with second, and other junior, lien holders.

The fact sheet can be downloaded here.

Consumers that are having difficulty making their house payment should seek the services of a certified non-profit (FREE, Non-Biased) foreclosure prevention specialist to understand their options and responsibilities during a foreclosure. For a complete list of foreclosure prevention specialists, click here.

3 comments:

  1. By knowing your local real estate investing market, you're able to keep your finger on the pulse of your local community and to stay abreast of changes in trends, sales prices and rental rates. Knowing immediately about these changes is critical to your investing future.

    ReplyDelete
  2. IN MINNESOTA DO THEY TYPICALLY FILE A DEFICIENCY JUDGEMENT IF THE HOME WAS SOLD ON A SHORT SALE PRIOR TO ANY SHERIFFS SALE???I AM CURRENTLY IN THAT POSITION, SHORT SALE APPROVED NOT CLOSED YET.

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  3. Our opinion* is that NO, a lender cannot seek judgement if they accept a short sale. There may be, however, tax consequences to that short sale. For more information, check out our fact sheet on taxes here:
    http://hocmn.org/Stock/Editor/file/FactSheet_TaxIssues_ForeclosureAndWorkouts_vAug2009.pdf

    Thanks for reading our blog!

    *We're not attorneys... so can't offer legal advice. Please hire a Real Estate Attorney for their professional opinion if you have additional questions.

    ReplyDelete

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