Foreclosure counseling required in Minnesota

Minnesota residents who are behind on their mortgage payments often wonder how they'll know if the mortgage company is moving ahead with foreclosure. One good sign is if the mortgage company sends a letter with information about foreclosure prevention counseling. Foreclosure prevention counseling is usually offered by non-profit agencies who try to help homeowners resolve their mortgage delinquency. Minnesota requires mortgage lenders to notify homeowners of counseling options before moving forward with foreclosure.

According to Minnesota state law, the mortgage company must provide a pre-foreclosure notice. That notice must include specific language and be consistent with a pre-approved format. In that notice, the lender will state that they are reaching out to the homeowner because they wish to avoid the foreclosure process. The notice will then describe the counseling process and will state the name of an agency that may be contacting the homeowner.

In many cases, the lender will proactively pass the homeowner's contact information on to a counseling agency. The agency will often then directly contact the homeowner to offer assistance. If the homeowner agrees to foreclosure assistance, the agency then notifies the mortgage company of that development. To accept assistance, the homeowner must reply to the form in writing within 15 days. The homeowner and the agency then work together to negotiate some kind of settlement. That settlement could include a repayment plan, a restructuring of the mortgage or even a waiver of some of the past due debt.

Minnesota law requires a counseling notification because the government wants to reduce the number of foreclosures that are processed. A foreclosure doesn't benefit anyone. The homeowner loses their home. The mortgage company doesn't receive payment. Even the neighborhood's home values may drop. Foreclosure counseling is one way in which homeowners can proactively work to become current on their outstanding mortgage debt.

Source: Office of the revisor of statutes, "580.021 FORECLOSURE PREVENTION COUNSELING.", October 13, 2014

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