relating to housing; providing certain tenant remedies; providing single point
of contact and various notice provisions relating to mortgage foreclosures;
prohibiting mortgage foreclosure dual tracking; requiring mandatory mediation
prior to commencing a mortgage foreclosure;amending Minnesota Statutes
2012, sections 504B.151, subdivision 1; 580.021, by adding a subdivision;
580.022, subdivision 1; 580.03; 580.041, subdivisions 1b, 2; proposing coding
for new law in Minnesota Statutes, chapter 580.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 2012, section 504B.151, subdivision 1, is amended to
Subdivision 1. Limitation on lease and notice to tenant.
(a) Once a landlord has
received notice of a contract for deed cancellation under section
or notice of a
mortgage foreclosure sale under chapter 580 or 582, or summons and complaint under
chapter 581, the landlord may only enter into (i) a periodic residential lease agreement
with a term of not more than two months or the time remaining in the contract cancellation
period or the mortgagor's redemption period, whichever is less or (ii) a fixed term
residential tenancy not extending beyond the cancellation period or the landlord's period
of redemption until:
(1) the contract for deed has been reinstated or paid in full;
(2) the mortgage default has been cured and the mortgage reinstated;
(3) the mortgage has been satisfied;
(4) the property has been redeemed from a foreclosure sale; or
(5) a receiver has been appointed.
(b) Before entering into a lease under this section and accepting any rent or security
deposit from a tenant, the landlord must notify the prospective tenant in writing that the
landlord has received notice of a contract for deed cancellation or notice of a mortgage
foreclosure sale as appropriate, and the date on which the contract cancellation period or
the mortgagor's redemption period ends.
(c) This section does not apply to a manufactured home park as defined in section
2.5327C.01, subdivision 5
2.6(d) A landlord who violates the requirements in this subdivision is liable to the
2.7lessee for a civil penalty of $500.
Sec. 2. Minnesota Statutes 2012, section 580.021, is amended by adding a subdivision
2.10 Subd. 5. Single point of contact. The party foreclosing on a mortgage must provide
2.11to the mortgagor a single point of contact in each of the forms prescribed in sections
2.12580.022 and 580.041. The contact information must include a contact name, address,
2.13telephone number, and e-mail address. The party foreclosing on a mortgage must have
2.14alternative contacts to provide all of the assistance prescribed in this section when the
2.15single point of contact is not available to speak with a borrower for more than 48 hours.
2.16The servicer must provide written notice within ten days when the single point of contact
2.17has changed. The borrower must be able to access the information included in this
2.18section and may seek a civil penalty of $500 against the servicer for failure to comply
2.19with this section. The single point of contact must be an employee of the servicer who can
2.20coordinate all of the information concerning that borrower's situation and must:
2.21(1) be able to access all of the documents related to that borrower's loan and provide
2.22them to the borrower, if requested, in a timely manner;
2.23(2) know of the borrower's prior contact with the servicer and track ongoing contact
2.24with the servicer;
2.25(3) know the deadlines applicable to the borrower and provide that information
2.26if requested, including but not limited to:
2.27(i) what is owed on the borrower's loan and when it is due;
2.28(ii) if the servicer is eligible for mediation and the last date to request mediation; and
2.29(iii) when all relevant foreclosure proceedings may commence or be completed;
2.30(4) provide information about the current status of the loan; and
2.31(5) provide information on the borrower's foreclosure prevention alternatives.
Sec. 3. Minnesota Statutes 2012, section 580.022, subdivision 1, is amended to read:
Subdivision 1. Counseling form.
The notice required under section
must be printed on colored paper that is other than the color of
any other document provided with it and must appear substantially as follows:
3.5Foreclosure Prevention Counseling and Mediation
3.6Why You Are Getting This Notice
3.7YOU HAVE DEFAULTED ON A MORTGAGE OF THE HOMESTEAD
3.8PROPERTY DESCRIBED AS [Legal Description and Property Address]. THE HOLDER
3.9OF THE MORTGAGE, [Name of Holder of Mortgage] INTENDS TO FORECLOSE ON
3.10THIS PROPERTY. YOU HAVE THE RIGHT TO PARTICIPATE IN A MEDIATION
3.11HEARING WITH A NEUTRAL MEDIATOR, A REPRESENTATIVE OF [Name of
3.12Servicer], AND TO BRING AN ATTORNEY, HOUSING COUNSELOR, OR OTHER
3.13TRAINED ADVOCATE TO DETERMINE IF AN ALTERNATIVE TO FORECLOSURE
3.14CAN BE FOUND. YOU WILL RECEIVE NOTICE OF A MEDIATION HEARING
3.15THAT WILL TAKE PLACE WITHIN 20 DAYS OF THE NOTICE. YOU MUST
3.16RESPOND WITHIN TEN DAYS OF THE SCHEDULED MEDIATION IF YOU
3.17INTEND TO PARTICIPATE. IF YOU DO NOT RESPOND, THE MEDIATION
3.18HEARING WILL BE CANCELED.
We do not want you to lose your home and your equity. Government-approved
nonprofit agencies are available to, if possible, help you prevent foreclosure.
We have given your contact information to an authorized foreclosure prevention
counseling agency to contact you to help you prevent foreclosure.
3.23Who Are These Foreclosure Prevention Counseling Agencies
They are nonprofit agencies who are experts in housing and foreclosure prevention
counseling and assistance. They are experienced in dealing with lenders and homeowners
who are behind on mortgage payments and can help you understand your options and
work with you to address your delinquency. They are approved by either the Minnesota
Housing Finance Agency or the United States Department of Housing and Urban
Development. They are not connected with us in any way.
3.30Which Agency Will Contact You
[insert name, address, and telephone number of agency]
You can also contact them directly."
Sec. 4. Minnesota Statutes 2012, section 580.03, is amended to read:
3.34580.03 NOTICE OF SALE; SERVICE ON OCCUPANT.
Six weeks' published notice shall be given that such mortgage will be foreclosed by
sale of the mortgaged premises or some part thereof, and at least four weeks before the
appointed time of sale a copy of such notice shall be served in like manner as a summons
in a civil action in the district court upon the person in possession of the mortgaged
premises, if the same are actually occupied. If there be a building on such premises used
by a church or religious corporation, for its usual meetings, service upon any officer or
trustee of such corporation shall be a sufficient service upon it. The notices required
must be served simultaneously with the notice of
foreclosure required by this section.
4.10The notice required under this section may not be served upon the person in
4.11possession of the mortgaged property until 15 days after the mortgage servicer has sent
4.12the borrower a statement that if the borrower is a service member, or a dependent of a
4.13service member, the borrower may be entitled to certain protections under the federal
4.14Servicemembers Civil Relief Act, United States Code, title 50, section 501, regarding the
4.15service member's interest rate and the risk of foreclosure, and counseling for covered
4.16service members that is available at agencies such as Military OneSource and Armed
4.17Forces Legal Assistance. This notice shall be sent via certified United States mail. The
4.18borrower is entitled to a $500 civil penalty from the mortgage servicer in a civil cause of
4.19action for failure to comply with the notice requirements in this section.
4.20EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
4.21foreclosures commenced on or after that date.
Sec. 5. Minnesota Statutes 2012, section 580.041, subdivision 1b, is amended to read:
Subd. 1b. Form and delivery of foreclosure advice notice. (a)
advice notice required by this section must be in 14-point boldface type and must be
printed on colored paper that is other than the color of the notice of foreclosure required
and the notice of redemption rights required by this section,
and that does not obscure or overshadow the content of the notice. The title of the notice
must be in 20-point boldface type. The notice must be on its own page. The foreclosure
advice notice required by this section must be delivered with the notice of foreclosure
required by sections
. The foreclosure advice notice required by this
section also must be delivered with each subsequent written communication regarding the
foreclosure mailed to the mortgagor by the foreclosing party up to the day of redemption.
A foreclosing mortgagee will be deemed to have complied with this section if it sends
the foreclosure advice notice required by this section at least once every 60 days during
the period of the foreclosure process. The foreclosure advice notice required by this
section must not be published.
5.3(b) The foreclosure advice notice must provide the homeowner with a single point of
5.4contact with the servicer as defined in section 580.021, subdivision 5. A borrower shall
5.5have a civil cause of action, including a $500 civil penalty against a mortgage servicer
5.6who fails to provide a single point of contact to the borrower in the foreclosure notice.
5.7EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
5.8foreclosures commenced on or after that date.
Sec. 6. Minnesota Statutes 2012, section 580.041, subdivision 2, is amended to read:
Subd. 2. Content of foreclosure advice notice.
The foreclosure advice notice
required by this section must appear substantially as follows:
"Help For Homeowners in Foreclosure
||The attorney preparing this foreclosure is:
||(Attorney name, address, phone)
||It is being prepared for:
|loss mitigationname of employee of servicer or lender
that serves as a single point of contact for homeowner to contact, phone
number for that employee of servicer or lender)
AS OF [insert date], this lender says that you owe $[insert dollar amount] to bring
your mortgage up to date (or "reinstate" your mortgage). You must pay this amount,
plus interest and other costs, to keep your house from going through a sheriff's sale.
The sheriff's sale is scheduled for [insert date] at [insert time] at [insert place].
Mortgage foreclosure is a complex process. People may contact you with advice and
offers to help "save" your home.
It is important that you learn as much as you can about foreclosure and
your situation. Find out about all your options before you make any agreements with
anyone about the foreclosure of your home.
As soon as possible, you should contact your lender at the above number to talk
about things you might be able to do to prevent foreclosure. You should also
consider contacting the foreclosure prevention counselor in your area. A foreclosure
prevention counselor can answer your questions, offer free advice, and help you
create a plan which makes sense for your situation.
Contact the Minnesota Home Ownership Center at 651-659-9336 or 866-462-6466
or www.hocmn.org or contact the United States Department of Housing and Urban
Development at 1-800-569-4287 or www.hud.gov to get the phone number and
location of the nearest certified counseling organization. Call today. The longer you
wait, the fewer options you may have for a desirable result.
6.4Changing the Date of the Sheriff's Sale
6.5You may be able to postpone the sheriff's sale on your home. If you live in your home
6.6and it has four units or less, you can postpone the sheriff's sale for five months from
6.7the original date of sale if you have a six-month redemption period, or eleven months
6.8from the original date of sale if you have a twelve-month redemption period. If you
6.9postpone the sheriff's sale, your redemption period will be reduced to five weeks.
6.10You must do all of the following things 15 days before the scheduled sheriff's sale:
6.11(1) execute a sworn affidavit of postponement;
6.12(2) record the affidavit in the county recorder and registrar of titles where the
6.13mortgage is recorded;
6.14(3) file a copy with the sheriff; and
6.15(4) provide a copy of the recorded affidavit showing the date it was recorded to the
6.16attorney foreclosing on the mortgage."
6.17EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
6.18foreclosures commenced on or after that date.
Sec. 7. [580.043] MORTGAGE FORECLOSURE DUAL TRACKING
6.21 Subdivision 1. Definitions. (a) For purposes of this section, the terms defined
6.22in this section have the meanings given.
6.23(b) "Borrower" means the individual or entity that is liable on the promissory note
6.24secured by the mortgage, except that the term does not include:
6.25(1) a person who has surrendered the mortgaged property, as evidenced by either a
6.26letter or other written notice confirming the surrender or by delivery of the keys to the
6.27property to the mortgage servicer or authorized agent; or
6.28(2) a person who has filed a bankruptcy case under United States Code, title 11,
6.29chapter 7, 11, 12, or 13, and the bankruptcy court has not entered an order closing or
6.30dismissing the bankruptcy case or granting relief from a stay of foreclosure.
6.31(c) "Complete loan modification request" means a loan modification request that
6.32contains a completed application form, documents verifying a borrower's income and
6.33assets, an explanation of the borrower's hardship, and documents verifying the borrower's
6.34tax information or a signed release for the Internal Revenue Service.
7.1(d) "Dual tracking" means a servicer beginning or continuing a mortgage foreclosure
7.2under this chapter after the servicer has received a request by the borrower for a loan
7.3modification, forbearance, payment deferral, alternate repayment plan, or deed in lieu of
7.4foreclosure and has not accepted or rejected that request.
7.5(e) "Loan modification request" means a written request from a borrower to the
7.6borrower's mortgage servicer for a modification of the borrower's mortgage loan in order
7.7to prevent an anticipated foreclosure or to suspend or terminate a foreclosure that is in
7.9(f) "Mortgage servicer" means an entity that is responsible for interacting with
7.10the borrower, including managing the loan account on a daily basis, such as collecting
7.11and crediting periodic loan payments, managing an escrow account, or enforcing the
7.12promissory note and mortgage, either as the current owner of the promissory note or
7.13as the current owner's authorized agent.
7.14 Subd. 2. Applicability. This section applies to mortgage foreclosures on the basis
7.15specified in section 580.041, subdivision 1a.
7.16 Subd. 3. Prohibition; dual tracking; continuation or commencement of
7.17foreclosure after receipt of loan modification request. (a) Upon receipt by a mortgage
7.18servicer of a request for a loan modification, forbearance, payment deferral, alternate
7.19repayment plan, or deed in lieu of foreclosure from a borrower regarding a mortgage loan
7.20for which the mortgage servicer is responsible, the mortgage servicer shall not begin a
7.21foreclosure for 90 days or, if a foreclosure of the mortgage loan is in progress, must stop
7.22the foreclosure process for 90 days or until the mortgage servicer and borrower have
7.23agreed upon and entered into a signed agreement, whichever comes first. The mortgage
7.24servicer shall not start or continue a foreclosure, even after the 90 days have passed,
7.25unless: (1) the servicer has provided notice to the borrower that the borrower's request
7.26has been rejected, including an explanation for why the request was rejected; or (2) the
7.27borrower has received a copy of a loan modification, forbearance, payment deferral,
7.28alternate repayment plan, or deed in lieu of a foreclosure agreement signed by the servicer.
7.29(b) A mortgage servicer need not consider a loan modification request if the loan
7.30modification request is not a complete loan modification request as defined in subdivision
7.311, paragraph (e).
7.32 Subd. 4. Civil cause of action; dual tracking. A borrower who is the victim of
7.33dual tracking by the borrower's mortgage servicer has a civil cause of action against
7.34the mortgage servicer for any damages incurred by the borrower as a result of the dual
7.35tracking plus the borrower's reasonable attorney fees and costs. The servicer is prohibited
7.36from adding monetary judgments and awards under this section to a borrower's mortgage.
8.1 Subd. 5. Injunctive relief. A borrower may bring an action for injunctive relief to
8.2stop a foreclosure based on a material violation of this section. The injunction shall remain
8.3in place until the court determines that the mortgage service has corrected and remedied
8.4the violation or violations giving rise to the action for injunctive relief.
8.5 Subd. 6. Redemption period. The relief available in this section is available to a
8.6borrower during the redemption period under section 580.23. The failure of the servicer to
8.7comply with subdivision 3 shall annul a sheriff sale under this chapter.
8.8EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
8.9foreclosures commenced on or after that date.
Sec. 8. [580.0431] MANDATORY MEDIATION.
8.11 Subdivision 1. Mandatory mediation. This section applies to foreclosures of
8.12mortgages under chapters 580 and 581 on property consisting of one to four dwelling
8.13units, one of which the owner occupies as the owner's principal place of residency. Prior
8.14to beginning a mortgage foreclosure and before notice of the pendency under section
8.15580.032, subdivision 3, or the lis pendens for a foreclosure under chapter 581 is recorded,
8.16a party foreclosing a mortgage must participate in mandatory mediation and provide to the
8.17mortgagor information contained in a form prescribed in section 580.022, subdivision 1.
8.18The servicer must provide all the relevant contact information for the servicer and any
8.19representative of the servicer who will attend the mediation and the contact information
8.20for the borrower to the Office of Administrative Hearings. The borrower must contact the
8.21Office of Administrative Hearings to confirm participation in the mediation within ten
8.22days of the scheduled mediation. The servicer shall add a $40 fee to the borrower's loan
8.23once the borrower and servicer have participated in mediation.
8.24 Subd. 2. Counseling. Prior to attending the mandatory mediation, the borrower
8.25must contact the foreclosure prevention counseling agency described in section 580.041,
8.26subdivisions 2 and 2a, to learn about the foreclosure prevention services available to them.
8.27 Subd. 3. Representation. (a) The borrower may have representation at the
8.28mediation conference. The representation may be an attorney, advocate, or other
8.29individual trained in housing counseling.
8.30(b) The servicer must send a representative with the authority to negotiate a resolution.
8.31 Subd. 4. Office of Administrative Hearings. (a) The Office of Administrative
8.32Hearings shall provide mediation to servicers and borrowers as required in this section.
8.33The Office of Administrative Hearings shall within ten business days of receiving a
8.34request for mediation assign a mediator which may be a judge, an attorney, or other staff
8.35trained in mediation. The Office of Administrative Hearings must provide the following
9.1information to the borrower, the servicer, and any subordinate mortgage lienholder within
9.220 days of receipt of the request:
9.3(1) what documents must be provided prior to mediation to the Office of
9.5(2) when the mediation will take place;
9.6(3) where the mediation will take place;
9.7(4) who may attend the mediation; and
9.8(5) any rights and responsibilities of the parties to the mediation.
9.9(b) The Office of Administrative Hearings is immune from civil liability for actions
9.10within the scope of its position under this chapter. The mediators assigned do not have a
9.11duty to advise the parties of their legal rights. Nothing in this chapter is a limitation
9.12to the immunity that otherwise extends to the Office of Administrative Hearings that
9.13otherwise exists under the law.
9.14(c) The mediation must occur no later than 45 days after receiving contact from the
9.15servicer requesting the mediation with the Office of Administrative Hearings.
9.16(d) The data regarding the finances and mortgages for these mediations that is
9.17created, collected, and maintained by the Office of Administrative Hearings is private data
9.18on individuals as defined by section 13.02, subdivision 12.
9.19(e) A mediation agreement signed by both parties may be submitted to any court
9.20having jurisdiction over the parties and shall be enforced by any court having jurisdiction
9.21over the parties.
9.22(f) The servicer shall submit a mediation fee of $160 to the Office of Administrative
9.23Hearings at or before the initial mediation meeting.
9.24 Subd. 5. Disposition of fees. Mediation fees collected by the Office of
9.25Administrative Hearings under this section must be deposited in the administrative
9.26hearings account in the state treasury and are appropriated to the office for the purposes
9.27of this section.
9.28 Subd. 6. Good faith required. (a) The parties must engage in mediation in good
9.29faith. Not participating in good faith includes:
9.30(1) failure to attend and participate in mediation sessions without cause;
9.31(2) failure to provide full information regarding the financial obligations of the
9.32parties and other creditors;
9.33(3) failure of the creditor to designate a representative to participate in the mediation
9.34with authority to make binding commitments;
9.35(4) lack of a written statement of debt restructuring alternatives and a statement of
9.36reasons why alternatives are unacceptable to one of the parties; and
10.1(5) other similar behavior that evidences lack of good faith by a party.
10.2A failure to agree to reduce, restructure, refinance, or forgive debt is not, in itself, evidence
10.3of lack of good faith by the creditor.
10.4(b) If the mediator determines that either party is not participating in good faith as
10.5defined in subdivision 1, the mediator must file an affidavit indicating the reasons for the
10.6finding with the attorney general and with parties to the mediation.
10.7 Subd. 7. Creditor's bad faith; court supervision. If the mediator finds the creditor
10.8has not participated in mediation in good faith, the debtor may require court-supervised
10.9mandatory mediation by filing the affidavit with the district court of the county of the
10.10debtor's residence with a request for court supervision of mediation and serving a copy of
10.11the request on the creditor. Upon request, the court shall require both parties to mediate
10.12under the supervision of the court in good faith for a period of not more than 180 days. All
10.13mortgage foreclosure proceedings must be suspended during this period. The court may
10.14issue orders necessary to effect good faith mediation. Following the mediation period, if
10.15the court finds the creditor has not participated in mediation in good faith, the court shall
10.16by order suspend the creditor's mortgage foreclosure proceeding for an additional period
10.17of 180 days. A creditor found by the mediator not to have participated in good faith shall
10.18pay the attorney fees and costs of the debtor requesting court supervision, in addition to
10.19further suspension of the creditor's mortgage foreclosure proceeding.
10.20 Subd. 8. Debtor's lack of good faith. A creditor may immediately proceed with
10.21the creditor's mortgage foreclosure proceedings upon receipt of a mediator's affidavit
10.22of a debtor's lack of good faith.
10.23EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
10.24foreclosures commenced on or after that date.