Recently a number of stories have hit the media regarding certain servicers halting or suspending foreclosures due to issues (errors) with their internal document processing and legal procedures. The servicing companies that have voluntarily issued moratoria are GMAC and JPMorgan Chase, although many other servicers are reviewing their procedures, and others may follow suit.
The question has arisen as to whether these foreclosure suspensions/moratoria will affect any Minnesota homeowners. The short answer is: probably not.
The key reason is due to the fact that the vast majority of foreclosures in Minnesota follow a process known as Foreclosure by Advertisement, and not the process of judicial foreclosure (where a judge must enter a judgment of foreclosure against a homeowner before the house can be auctioned/sold). In Minnesota, no such step is required if the servicer is pursuing Foreclosure by Advertisement.
For more information about the Foreclosure by Advertisement process, the MN Home Ownership Center has created a fact sheet that highlights the steps a lien holder must take to foreclose. That document is here.
From the NY Times:
The lender, JPMorgan Chase, said on Wednesday that it was halting 56,000 foreclosures because some of its employees might have improperly prepared the necessary documents. All of the suspensions are in the 23 states where foreclosures must be approved by a court, including New York, New Jersey, Connecticut, Florida and Illinois. [Emphasis ours]
The Center will continue to monitor the situation, and if other servicers join the ranks of GMAC and JPMorgan Chase, we'll update the blog. In addition... if any servicers halt foreclosures in Minnesota, we'll highlight that information as well.
If you're struggling with your mortgage payments - no matter who your lender or servicer is - getting help as soon as possible is key. There is a network of FREE, non-biased, non-profit Housing Counselors that specialize in foreclosure prevention. To locate your closest counselor, visit the MN Home Ownership Center's website, here.