Deficiency judgments in Minnesota may be obtained when a foreclosure property is sold at a public foreclosure auction sale for less than the loan balance. The lender is limited to the amount of money they can collect through a deficiency judgment. They can only collect the difference between the sale proceeds and the fair market value of the property. Most of the time, lenders do not bother to pursue deficiency judgments in Minnesota because lenders know that most borrowers do not have other assets that are worth going after. It costs them time and money to pursue deficiency judgments. If the borrower does have money or has walked away on purpose to avoid paying their mortgage payments when they can afford them, then the lender may pursue a deficiency judgment against them. You should check the Minnesota laws regarding foreclosure and deficiency judgments, and consult with a Minnesota foreclosure defense attorney to find out your legal rights.
Avoiding a Deficiency Judgment in Minnesota
You can avoid deficiency judgments in Minnesota by contacting your lender and working out a solution to save your home from foreclosure such as:
- Mortgage modification
- Reinstatement
- Refinance
- Forbearance
- Short sale
- Deed in lieu of foreclosure
- Filing for bankruptcy
Lenders are willing to work with you if they feel you are serious about saving your home from foreclosure. Make sure you get something in writing from your lender that they will not pursue a deficiency judgment against you if you negotiate a short sale or deed in lieu of foreclosure.
Why Lenders Don’t Like to Pursue Deficiency Judgments
Here are some reasons why Minnesota lenders don’t like to pursue deficiency judgments:
- They know borrowers don’t have assets to go after
- They would rather spend their time and money on something that makes them money
- They may want to do business with former borrowers again.
- Many times they don’t have a forwarding address where to serve notice of a judgment on the borrower
It is rare that lenders pursue deficiency judgments in Minnesota against former borrowers. However, you should be aware that they have the legal right to do so if you are involved in a foreclosure.
Attorney Help
Minnesota foreclosure law is complicated. It is a good idea to hire a Minnesota foreclosure defense attorney to help you negotiate a resolution to save your home from foreclosure and avoid a deficiency judgment. The attorney is an expert at foreclosure laws, and can explain the laws to you and answer your questions. An attorney can negotiate with your lender to settle a deficiency judgment against you.
