Foreclosure problems

There are two ways to foreclose a mortgage in Minnesota, one is “by action” and one is “by advertisement”. 

The methods are set out in Minn. Stat. Chapters 580 and 581. 

A foreclosure “by action” means that the lender sues you, gets a judgment, and then has an auction of your collateral. A foreclosure “by advertisement” means that the lender sends you notices, publishes in a legal newspaper, and has a sheriff's sale, but there is no court involvement. “By advertisement” is somewhat cheaper and somewhat quicker, and it is the way virtually every Minnesota residential mortgage is foreclosed. 

The difference, from the borrower's standpoint, is that a foreclosure “by advertisement”, with a six month redemption period, means that the lender cannot come after you for a deficiency (a short-fall between the loan amount and the price at which the lender sells the home to another person). So, if your mortgage is $150,000, and the lender forecloses the loan “by advertisement” and with a six month period of redemption, even if the lender sells the home to a third party for $100,000.00, you will not owe the lender any money. (This assumes you don't do anything stupid, like destroy the house!)

If it is a conventional mortgage, the usual thing that happens is that Wells Fargo forecloses “by advertisement”.

However, if it is a VA mortgage , the Veterans Administration may well pursue you for any deficiency. The same thing applies to a Rural Housing loan through the US Department of Agriculture (formerly Farm Home Administration). It appears that an FHA loan has the authority to pursue you, but I have not seen that happen in practice.

So, you need to be certain what kind of mortgage you have.