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Minnesota Legislature

Office of the Revisor of Statutes

SF 3607

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to mortgage foreclosures; declaring an emergency; permitting
postponement of certain mortgage foreclosure proceedings; proposing coding for
new law in Minnesota Statutes, chapter 582.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text beginFINDINGS AND PURPOSE.
new text end

new text begin The legislature finds and declares that subprime lending has grown rapidly, both
nationally and in the state of Minnesota, that subprime loans have led to an increase
in foreclosure rates which severely and adversely affects neighborhoods as well as the
families who are losing their homes, that homes vacated due to foreclosures attract crime
and lead to the deterioration of neighborhoods, that foreclosure rates tripled in some areas
of the state in 2007, and that the increase in foreclosures in 2008 is expected to exceed the
increase in 2007. The legislature declares that these conditions have created a housing
emergency that justifies legislation for the extension of the time of redemption from
mortgage foreclosure and execution sales and other similar relief. The state possesses
the right under its police power to declare a state of emergency in furtherance of the
inherent and fundamental purposes of government to safeguard the public and promote
the general welfare of the people.
new text end

Sec. 2.

new text begin [582.33] EMERGENCY DECLARED TO EXIST.
new text end

new text begin The legislature of the state of Minnesota hereby declares that a public economic
emergency exists in the state of Minnesota.
new text end

Sec. 3.

new text begin [582.34] MORTGAGEE MAY APPLY TO DISTRICT COURT FOR
RELIEF.
new text end

new text begin In any proceedings previously commenced for the foreclosure of a mortgage on
real estate by advertisement, in which a sale of the property has not been had, or in any
proceedings hereafter commenced, when the mortgager, or the owner in possession of the
mortgaged premises, or anyone claiming under the mortgager, or anyone liable for the
mortgage debt, at any time after the issuance of the notice of foreclosure proceedings, shall
apply to the district court of the county wherein such foreclosure proceedings are being
had, or are pending, by filing and serving a summons and verified complaint requesting
that the sale in foreclosure by advertisement be postponed and that the foreclosure, if any,
shall proceed by action. If it appears to the court that granting of the relief as requested
would be equitable and just, then the foreclosure proceedings by advertisement may be
postponed by the court by an ex parte order which shall be served with the summons and
complaint upon the party foreclosing or his attorney and at the time of the hearing upon
such order, the court may then further postpone such sale, and the parties seeking to
foreclose such mortgage shall proceed, if at all, to foreclose said mortgage by interposing
a cross complaint in such action. Such service may be made as now provided for the
service of a summons in a civil action, or by registered mail on the person foreclosing
or his authorized agent or attorney at the last known address of such person, agent, or
attorney respectively. As a condition precedent to the postponement of a foreclosure sale
by advertisement the party filing the verified complaint shall pay to the clerk for the person
foreclosing the mortgage the expenses incurred not including attorney fees which may
accrue prior to any postponement. The filing of the verified complaint shall be deemed a
waiver of publication of notice of postponement of the foreclosure sale and the sale at the
time which may be fixed by the court shall be deemed to be a sale postponed in lieu of the
time of sale specified in the published notice of mortgage foreclosure sale.
new text end

Sec. 4.

new text begin [582.35] COURT MAY ORDER RESALE.
new text end

new text begin (a) When any mortgage has been foreclosed by action, the court shall, on the coming
in of the report of sale, cause notice of a hearing thereon to be served on the parties to the
action who have appeared, and fix the time and place for the hearing on the report. Before
granting an order confirming the sale, the court shall, if it appears upon due examination
that the sale price is unreasonably and unfairly inadequate, or that justice has otherwise
not been done, order a resale. If the sale is confirmed, the sheriff, or his deputy, shall
execute and deliver the proper certificate of sale which shall be recorded within 20 days
after such confirmation. Upon the hearing of the motion for an order confirming the sale
of the premises involved in the foreclosure of mortgages by action, in case the evidence
is insufficient to establish a fair and reasonable market or rental value of such property,
the court shall receive any competent evidence, including evidence tending to establish
the actual value of the property involved in the mortgage foreclosure proceedings, for
the purpose, or purposes, for which the property is or can be used. The court shall also
receive any evidence tending to show to what extent, if any, the property has decreased
in actual or market value by reason of the economic conditions existing at the time of or
prior to such sale.
new text end

new text begin (b) In case the parties to any foreclosure action shall agree in writing upon terms of
compromise settlement thereof, or of composition of the mortgage indebtedness, or both,
the court shall have jurisdiction and may by its order confirm and approve the settlement
or composition, or both, as the case may be.
new text end

new text begin (c) The court shall have the same jurisdiction to postpone the enforcement of
judgment by execution sale or to order resale or give other relief where a judgment is
rendered in an action to collect a debt or obligation secured by a real estate mortgage, the
foreclosure of which might be affected under the terms of this act, as is conferred by this
act with regard to the mortgage.
new text end

Sec. 5.

new text begin [582.36] PERIOD OF REDEMPTION MAY BE EXTENDED.
new text end

new text begin Where any mortgage upon real property has been foreclosed and the period of
redemption has not yet expired, or where a sale is hereafter had, in the case of real estate
mortgage foreclosure proceedings, now pending, or which may subsequently be instituted
prior to the expiration of two years from the passage of this act, or upon the sale of any
real property under any judgment or execution where the period of redemption has not yet
expired, or where a sale is made hereafter within two years from and after the passage of
this act, the period of redemption may be extended for such additional time as the court
may deem just and equitable but in no event beyond May 1, 2010; provided that the
mortgagor, or the owner in possession of said property, in the case of mortgage foreclosure
proceedings, or the judgment debtor, in case of sale under judgment, or execution, shall
prior to the expiration of the period of redemption, apply to the district court having
jurisdiction of the matter, on not less than ten days' written notice to the mortgagee or
judgment creditor, or the attorney of either, as the case may be, for an order determining
the reasonable value of the income on said property, or, if the property has no income,
then the reasonable rental value of the property involved in such sale, and directing and
requiring such mortgagor or judgment debtor, to pay all or a reasonable part of the income
or rental value, in or toward the payment of taxes, insurance, interest, mortgage, or
judgment indebtedness at such times and in such manner as shall be fixed and determined
and ordered by the court; and the court shall thereupon hear said application and after the
hearing shall make and file its order directing the payment by the mortgagor, or judgment
debtor, of such an amount at such times and in such manner as to the court shall, under
all the circumstances, appear just and equitable. Provided that upon the service of the
notice or demand aforesaid that the running of the period of redemption shall be tolled
until the court shall its order upon such application. Provided, further, however, that if
the mortgagor or judgment debtor, or personal representative, defaults in the payments
required by the order, or commits waste, his right to redeem from the sale shall terminate
30 days after such default and holders of subsequent liens may redeem in the order and
manner now provided by law beginning 30 days after the filing of notice of the default
with the clerk of such district court, and his right to possession shall cease and the party
acquiring title to the real estate shall then be entitled to the immediate possession of said
premises. If default is claimed by allowance of waste, the 30-day period shall not begin to
run until the filing of an order of the court finding such waste. Provided, further, that the
time of redemption from any real estate mortgage foreclosure or judgment or execution
sale heretofore made, which otherwise would expire less than 30 days after the passage
and approval of this act, is extended to a date 30 days after the passage and approval of
this act, and in that case, the mortgagor, or judgment debtor, or the assigns or personal
representative of either, as the case may be, or the owner in the possession of the property,
may, prior, to that date, apply to the court for and the court may thereupon grant the relief
as provided in this section. Provided, further, that prior to May 1, 2010, no action shall
be maintained in this state for a deficiency judgment until the period of redemption as
allowed by existing law or as extended under the provisions of this act, has expired.
new text end

Sec. 6.

new text begin [582.37] COURT MAY REVISE AND ALTER TERMS.
new text end

new text begin Upon the application of either party prior to the expiration of the extended period of
redemption as provided in this act and upon the presentation of evidence that the terms
fixed by the court are no longer just and reasonable, the court may revise and alter said
terms, in such manner as the changed circumstances and conditions may require.
new text end

Sec. 7.

new text begin [582.38] TRIAL TO BE HELD WITHIN 30 DAYS.
new text end

new text begin The trial of any action, hearing, or proceeding mentioned in this act shall be held
within 30 days after the filing by either party of notice of hearing or trial, as the case may
be, and the hearing or trial may be held at any general or special term, or in chambers,
or during vacation of the court, and the order of the court shall be filed within five days
after trial or hearing, no more than five days stay shall be granted and review by the
Supreme Court may be had by certiorari, if application for the writ is made within 15
days after notice of such order and the writ shall be returnable within 30 days after the
filing of such order.
new text end

Sec. 8. new text beginINCONSISTENT LAWS SUSPENDED UNTIL MAY 1, 2010.
new text end

new text begin Every law and all the provisions thereof now in force insofar as inconsistent with the
provisions of this act, are hereby suspended until May 1, 2010. No extension of the period
for redemption nor any postponement of sale shall be ordered or allowed under this act
which would have the effect of extending the period for redemption beyond May 1, 2010.
new text end

Sec. 9. new text beginAPPLICATION OF ACT.
new text end

new text begin This act as to mortgage foreclosures shall apply only to mortgages made prior to
the passage and approval of this act but shall not apply to mortgages made prior to the
passage of this act which shall hereafter be renewed or extended for a period ending more
than one year after the passage of this act; neither shall this act apply in any way which
would allow a resale, stay, postponement, or extension to such time that any right might be
adversely affected by a statute of limitation.
new text end

Sec. 10. new text beginPROVISIONS SEVERABLE.
new text end

new text begin The provisions of this act are hereby declared to be severable. If one provision shall
be found by the decision of a court of competent jurisdiction to be invalid, that decision
shall not affect the validity of the other provisions of this act.
new text end