Minnesota updated its foreclosure laws this year in an effort to prevent mortgage fraud. The law requires people seeking title to a foreclosed property after the sheriff’s sale — and before the end of the redemption period — to notify the homeowner that the house can be redeemed for the sheriff’s sale price, if it’s less than the amount owed before the sale.


Little-known law could help foreclosed homeowners

St. Paul, Minn. — Many homeowners in foreclosure may not be aware there’s another option that would allow them to keep their homes. Under state law, they can buy their home back after the sheriff’s sale for the price of the winning bid. That bid can be tens or even hundreds of thousands of dollars less than what they owed on the house.

But the law is not widely known, and as a result many homeowners have lost out on the chance to stay in their homes. Marie Forsell, who owned a home in Washington County, is one of them.

What Forsell didn’t know was how much her house had sold for at the sheriff’s sale. After she’d agreed to take the $5,000, Forsell found out that her house — on which she owed close to $600,000 — had sold at auction for only about $86,000.

“I was absolutely sick to my stomach,” she said. “You mean to tell me I’ve worked for years with the mortgage company, and they just dumped it for $86,000 — which I never would have ever guessed, and now I had already signed the house away.”

That’s when Forsell discovered something else: under state law she could have bought her home back during the redemption period that follows the sheriff’s sale, for far less than what she owed.

Forsell says if she had known that, her family could have lent her the money. While people going through foreclosure probably couldn’t get a loan from a bank, they could potentially borrow the money elsewhere.

“They say it’s embarrassing to be in foreclosure. No, it’s embarassing to sign away your house for $5,000 and realize what you did,” said Forsell.

The investors who bought Forsell’s deed also bought her rights to redeem her house. Now, they can put it back on the market for a profit.

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