The Minnesota Homeowner Bill of Rights (MHBR) is a law that protects Minnesota homeowners from illegal foreclosure practices. The MHBR accomplishes this by making sure that the default process is fair, honest, and transparent to the homeowner. The MHBR seeks to end many of the unethical foreclosure practices committed during the foreclosure scandal of 2010. Most of the MHBR is set to go into effect on August 1, 2013.
The Minnesota Homeowner Bill of Rights only applies to residential and homeowner-occupied property. The property being foreclosed must not have more than four units.
What is a Private Right of Action?
A "private right of action" is a fancy way of saying that the homeowner has the right to bring the case to court if the lender has broken a law. This means that homeowners can turn non-judicial foreclosure into judicial foreclosures.
The MHBR also allows homeowners to collect legal fees if the homeowner wins the case against the lender, including attorney and court fees.
What Must the Mortgage Holder Do Before Foreclosing the Homeowner?
In order to foreclose a homeowner, the mortgage holder must offer a loan modification to the homeowner. The mortgage holder must also assist the homeowner in submitting the proper documentation for a loan modification.
If the homeowner is eligible for a loan modification, the homeowner can submit a loan modification up to one week before the sheriff’s sale of the home. Once the homeowner has submitted the loan modification, the mortgage holder is required to halt the foreclosure.
If the homeowner is not eligible for a loan modification, the mortgage holder must explain and offer all alternative methods to foreclosure.
What is Dual Tracking?
Dual tracking is the lending practice of offering loan modification to a homeowner in debt, while foreclosing the homeowner at the same time. Duel tracking is considered unethical because it is very misleading to the homeowner.
Under the Minnesota Homeowner Bill of Rights, dual tracking is illegal. If a borrower submits a loan modification application, the lender must choose to either modify the loan or foreclose the property. The lender cannot do both. The MHBR also forbids the mortgage holder from forwarding the homeowner’s case to the mortgage holder’s foreclosure department before a decision regarding loan modification has been made.
The MHBR will not ban dual tracking until October 31, 2013.
Should I Consult a Lawyer?
Buying and financing a piece of real estate can be one of the most important experiences in your life. An experienced real estate attorney can advise you of the different mortgage financing options for this financial endeavor. A Minnesota real estate attorney can also review any financial documents, and advise you about your obligations and the best way to proceed.