Homeownership Issues & The 2011 Legislative Session

This post is a guest post by Laura Hodges, AmeriCorps Member with the MN Home Ownership Center:
 

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2011 Legislative Update 

The 2011 legislative session at times got hotter than a July weekend. Combining that with the government shut down, Minnesota citizens might have questioned if the politicians were getting anything done. 

Well I am happy to report that lawmakers implemented two agreements during the most recent legislative session that offer additional protections to homeowners beginning August 1, 2011:

Mortgage Ownership Disclosure (Link)

This law updates an existing law that requires mortgage servicers to disclose to a borrower, upon request, who actually owns their mortgage loan and the contact information.  While this may be helpful for homeowners, it is especially helpful for Homeownership Advisors (foreclosure counselors) when working with homeowners facing foreclosure as the knowledge of who really owns the loan can be helpful when negotiating workout options.  

Extended Redemption Period for Reverse Mortgage Holders

The other change that was passed during the legislative session involves Reverse Mortgages. The law grants reverse mortgage borrowers, who have had a sheriff sale due to foreclosure, an extended redemption period of 12 months. This extension will give time for the homeowner to regain ownership if they can pay off the mortgage loan in full, or can be used as extended time to find alternative housing options. This change is welcome news for many reverse mortgage holders.

The Minnesota Homeownership Center would like to thank Laura for her valuable contributions to our work and mission over the past year.  You've been a great member of our team, and we wish you the best as you move on to pursue other goals!

Housing Updates at the Legislature

The most recent legislative session here in Minnesta has provided some interesting updates on consumer protections regarding housing and foreclosures.  Here's a quick recap:

SF2430 was signed by the governor and takes effect August 1, 2010. In addition to several reverse mortgage regulations, this bill modifies the Foreclosure Advice Notice given to homeowners in tandem with the Sheriff’s Sale notice.

The new notice includes:

• significantly more information about the redemption period, including what happens after the sale, how to find out how much the home sold for at sale,
• information about watching out for scams, and
• advice that you can also try to sell your house during redemption.
• It still includes the Center’s name as a contact for advice from foreclosure prevention counselors, and adds the US HUD website for locating counselors as well.

In addition to the newly worded Foreclosure Advice Notice, the bill restricts anyone attempting to acquire title directly from the homeowner after the sale by making sure they personally deliver specific information about the results of the foreclosure sale and redemption period rights 3-days before entering any agreement to acquire the title. They must now provide:

• the date of sale,
• purchaser title,
• price,
• several paragraphs of information about how to redeem,
• Notice that the homeowner doesn't have to move,
• Notice that the homeowner still retains the right to try and sell the property, and
• who to contact for advice (an attorney or a foreclosure counselor through Center or HUD).

The restrictions are intended to limit scams during the redemption period and do have consequences for non-compliance (damages, costs and fees). This section doesn’t apply to title transfers conducted by licensed real estate agents, government, nonprofit lenders, or a Deed-In-Lieu of Foreclosure through the foreclosing lender. This section of the bill expires December 31, 2012.


HF2668 was also signed by the governor and updates several tenants rights and notices. As it relates to tenants in a foreclosed property, for any evictions taking place prior to December 31, 2012 tenants must receive a 90 day notice to vacate after the end of the redemption period. If the lease term goes beyond the end of redemption, the renter can stay until the end of the lease (with an ADDITIONAL 90 day notice to leave at the end of the lease term). The one exception for allowing tenants to stay until the end of the lease would be if the successor (new owner, who purchased the home at the Sheriff's Sale) plans to occupy the house as their primary residence.