Foreclosure in Ramsey>Question Details

Tbjr82, Home Owner in Ramsey, MN

after the remption period is over and the house is sold what are the repercutions in minnesota?any money owed?

Asked by Tbjr82, Ramsey, MN Thu Jun 14, 2012

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In many cases, there will not be a deficiency judgement, but there are exceptions. As more and more homes go into foreclosure, servicers and their investors are getting aggressive about securing deficiency judgements whenever possible by doing a judicial foreclosure rather than a foreclosure by advertisement. This is especially true when the lender has some indication that you have the ability to pay.

As Chris stated, a short sale may be an option...

But that too has its issues. You may want to consider the tax consequences as well. In some, but not all cases, the IRS will waive the taxes on the "forgiven" mortgage amount. But the Mortgage Debt Forgiveness will sunset at the end of the year. http://www.irs.gov/newsroom/article/0,,id=254930,00.html
0 votes Thank Flag Link Thu Jun 14, 2012
Very good point Cameron. Rare indeed, but I have been having conversations with clients lately where their attorney is telling them this is more of a possibility than us realtors are seeing.

My understanding is it comes down to assets and the financial situation, and if the lender thinks they can recover the loss this way they may attempt it.
0 votes Thank Flag Link Thu Jun 14, 2012
Tbjr82,

Chris great answer!!

It also bears mentioning that there is a way (although seldom used) that a lender can obtain a deficiency judgement after a foreclosure. Foreclosure by advertisement is the most popular type of foreclosure by far, but if the banks chooses to use a judicial foreclosure, it is my understanding that they can still obtain a deficiency judgement after the foreclosure has completed. Just something to be aware of.

Cameron Piper
Coldwell Banker Burnet
licensed MN Broker
612-839-4202
Web Reference: http://www.CamPiper.com
0 votes Thank Flag Link Thu Jun 14, 2012
My colleague is correct and I might add that particular circumstances in various situations and related to various properties can prevail. Liz, 612-986-4105
0 votes Thank Flag Link Thu Jun 14, 2012
Minnesota is a Non-recourse state, so if you only have 1 mortgage they can not pursue you after a foreclosure for a deficiency.

Where this changes is for 2nd mortgages and multiple liens. They do have a legal right to pursue a homeowner through a judgement.

I have pasted a link to my blog that talks about this topic more in depth. In my opinion those with multiple mortgages & HELOC's are the best candidates for short sales. If you would like to speak with me directly just contact me directly on Trulia!

~Chris
0 votes Thank Flag Link Thu Jun 14, 2012
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