HF 3012

as introduced - 87th Legislature (2011 - 2012) Posted on 04/23/2012 10:55am

A bill for an act
relating to mortgage foreclosures; requiring certain calculations; requiring
reduction in the mortgage loan balance under certain circumstances; 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 begin [582.33] REDUCTION OF MORTGAGE AMOUNT TO REFLECT
NET BENEFIT OF FORECLOSURE TO LENDER.
new text end

new text begin (a) Before beginning a mortgage foreclosure, a mortgagee or mortgage servicer shall
determine the exact amount or reasonable estimates of the following dollar amounts:
new text end

new text begin (1) the amount owing on the mortgage loan;
new text end

new text begin (2) all costs of completing a foreclosure and selling the property, including costs
reasonably expected to be incurred during the redemption period, costs of maintaining the
property and preparing it for sale, payment of delinquent real estate taxes, and the real
estate commissions to be incurred in selling the property;
new text end

new text begin (3) the market value of the property at the end of the redemption period; and
new text end

new text begin (4) the expected value of foreclosure to the lender, consisting of clause (3) minus
clause (2).
new text end

new text begin (b) Prior to beginning a foreclosure on the property referenced in paragraph (a),
the mortgagee shall offer in writing to the owner the opportunity to replace the existing
mortgage loan with a new mortgage loan in an amount equal to the amount determined
under paragraph (a), clause (4), with a rate of interest at the current market rate but no
higher than the existing mortgage loan and with a 30-year amortization period unless the
borrower requests a shorter amortization.
new text end

new text begin (c) After receiving the offer required under paragraph (b), the owner shall have 60
days to decide whether to accept the offer. The mortgagee and owner may agree on a
different arrangement. The owner may also obtain a loan from another source to pay the
lender the amount specified in this paragraph.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for mortgage foreclosures
commenced on or after August 1, 2012.
new text end