Minnesota Foreclosure Activity Continues to Plummet

Sheriff’s Sales drop to less than 7,000 in the first half of 2013

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From the Minnesota Homeownership Center's most recent press release:  -- During the first half of 2013 the number of completed Sheriff’s Sales, the final step of the foreclosure process in Minnesota, has fallen to the lowest level since the beginning of the housing crisis.  Statewide, there were 6,795 foreclosures in the first two quarters of 2013. This number is 29 percent less than the same period of 2012, with a greater decline seen in the Twin Cities metro area (down 33 percent) than in Greater MN (down 23 percent).

The “2013 Semi-Annual Foreclosures in Minnesota” report was released Thursday by the Minnesota Homeownership Center using research provided by HousingLink and adds to other recent evidence showing that fewer Minnesota homeowners are struggling with mortgage payments than at any time since 2006. 

While more than 1,100 homes each month were lost to foreclosure in the first half of the year, this number pales in comparison to 2010, when Minnesota was experiencing the worst of the housing collapse.  During the first half of 2010, lenders were auctioning off more than 2,100 homes each month.

“Modest improvements in Minnesota’s economy and increasing home prices, combined with improvements in how banks and lenders deal with struggling homeowners are positively impacting the number of homes lost to foreclosure,” stated Ed Nelson, Marketing and Communications Manager for the Minnesota Homeownership Center. “However, while the most recent data is encouraging, we can’t lose sight of the fact homes are still being lost to foreclosure at rates that exceed twice those of historic levels.”

Homeowners that are struggling to make mortgage payments are encouraged to seek help from a certified foreclosure prevention specialist that is a member of the Homeownership Advisors Network as soon as possible.  Waiting limits a homeowner’s option.   To find a free local foreclosure specialist, click here, or call the Minnesota Homeownership Center at 866-462-6466.   

Midyear Sheriffs Sales Report Released

MIXED MESSAGE FOR HOUSING: YEAR OVER YEAR DOWN 15% BUT VIRTUALLY UNCHANGED FOR THE LAST 3 QUARTERS, RATES STILL EXCEED HISTORIC LEVELS

The Center has released its most recent report on the number of homes sold at Sheriffs’ sales in Minnesota during the first half of 2012... and it sends a mixed message on the overall health of Minnesota’s housing market.   The report indicates that there were 9,565 foreclosures in the first half of 2012, a decline 15% from the same time period in 2011, but also shows that foreclosures have remained virtually unchanged for the last three quarters. 

The report, titled “2012 Semi-Annual Foreclosures in Minnesota:  A Report Based on County Sheriff’s Sale Data”, analyzes sheriff’s sale data, the only accurate means of identifying completed foreclosures, from each of Minnesota’s 87 Counties.  Minnesota is unique among other states in the availability of current, comprehensive foreclosure sale data. 

 “This report does not predict the future, but it sends a discouraging message,” said Julie Gugin, Executive Director of the Minnesota Homeownership Center.  “While the year-over-year declines are positive, we also know that thousands of Minnesota families continue to struggle with payments, and those numbers remain stubbornly high.”  

The Minnesota Homeownership Center, Greater Minnesota Housing Fund, Minnesota Housing and Family Housing Fund published the report, with research provided by HousingLink.

A full copy of the report is available at the MN Homeownership Center’s website: here.

Foreclosures Are Getting Worse

As we've highlighted on this blog before (here and here, for example) Minnesota is NOT out of the woods yet, and will continue to see elevated numbers of foreclosures for quite a while.

On Friday, September 17th, Minnesota's most-populated county, Hennepin County, through its Taxpayer Services department, released a fresh round of information regarding Sheriff Sale data for August, 2010... and the data does not look good.

For the county, the number of foreclosure sales (Sheriff Sales) conducted in August of 2010 exceeded the number during the same periods during each of the three preceding years - 2009, 2008, and 2007.

Here is how August 2010 compares to the three previous years: 

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According to Hennepin County Taxpayer Services:

If foreclosure sales continue at this pace for the rest of the this year, the number may reach the 6,000-6,300 range

If this number is reached, 2010 could outpace 2009, and even rival the record-breaking number of 7,348 set in 2008.

In actuality, August 2010 recorded the 7th highest number of foreclosures in Hennepin County in a single month since these numbers have been tracked:

Minnesota homeowners continue to struggle with mortgage payments and continue to face the specter of foreclosure.  But it's not all doom-and-gloom.  Hennepin County (Taxpayer Services, Hennepin County Library and others) continues to work with the MN Home Ownership Center and its network of Housing Counseling agencies to offer FREE trustworthy resources to avoid foreclosure.  For a complete list of information sessions hosted by Hennepin County and the Minnesota Home Ownership Center, click here.

If you can't join us at one of the sessions, but would like to learn about what resources and assistance are available to Minnesota homeowners to avoid foreclosure, you can learn more about foreclosure avoidance services that are available - FREE - at the Center's website here or by calling us at 651-659-9336. 

Don't delay... the sooner you contact a non-profit housing counseling agency, the more options you have!

Surplus Money at Sheriff's Sale?

An anonymous commenter posted a question on our February 4th blog post regarding deficiency judgments (Sued – After a Foreclosure). It’s not often we receive a question that we can’t answer quickly… so we thought we’d post the commenter’s question, and the answer, here:

I have a weird one for you. What happens if the Sheriff sale nets more than you owe? Our house was auctioned on Tuesday. We owe $360,000 and it sold for $403,000.

Given the current housing environment in Minnesota… this situation doesn’t happen very often… so we had to run the question by one of the Center’s partners, the Housing Preservation Project. Attorney Jane Bowman of the Foreclosure Relief Law project helped us with the following information. (Thanks, Jane!)

The vast majority of residential mortgages in Minnesota are foreclosed through a process known as Foreclosure by Advertisement (for more information on this process, the Center has a fact-sheet/process chart, here).

In a foreclosure by advertisement, if there is a surplus after a sheriff’s sale, the borrower receives the surplus. However, as often is the case, the devil is in the details. In this case, the important detail is how the word “surplus” is defined.

Before a surplus is established, there is a list of entities that take their cut BEFORE the homeowner:

1. The cost of the foreclosure sale is covered,
2. All late payments are paid (with interest),
3. Any outstanding taxes and insurance are paid,
4. The remaining amount of the first mortgage is satisfied,
5. Then any junior lienors get paid (HELOCs, lines of credit, second mortgages, etc.)

If at this point there is a surplus, then the borrower gets the surplus.

For those of you that would like to dig into the statutes, the relevant statutes are available on-line here: 580.09, 580.10 (581.06 covers surplus amounts in a judicial foreclosure).

The statute is silent as to how the borrower would actually get paid… and how to request an surplus funds. After discussing this with Jane and other specialists, we’ve concluded that the local Sheriff’s office more than likely oversees the payment distribution, and if you believe you have a surplus due, you should contact the Sheriff’s office on how to proceed.

There is also another ‘wrinkle’ in this situation… as there may be tax implications of any surplus as well! As it doesn’t happen often… we are unclear on how Uncle Sam would treat the gross surplus amount (in our commenter’s case, would the full $43,000, not the surplus amount after all payments have been made, be considered income?). Any tax specialists like to share their knowledge with us in the comments?

All-in-all… it is most likely that our commenter will see very little, if any, of the ‘surplus’ amount from the Sheriff’s sale, but still may have tax issues on those funds.

Video Question #2 - Sheriff's Sale & Move-Out Date

The SECOND in our VIDEO QUESTION Series:

Today's question comes from Rebecca in Cottage Grove:

My Sheriff’s sale is taking place next week. A representative from the bank says that I have to vacate the property on that day… but I saw on your website that I have additional time to find somewhere else to live. Do I have to move next week? Do I have additional time, and if I do, how much time do I have?

Our answer via video, is here:

(Video Link)