Beginning June 15, 2009 borrowers who find themselves in foreclosure may delay the foreclosure sale for five months. The purpose of the change is to allow borrowers to try and get caught up on their mortgages.
There are some rules around who qualifies for a postponement of foreclosure sale. First, the property that is going into foreclosure must be classified as a homestead property and be between one to four units. Basically, this means that the property should be the primary residence and can be a single family home, duplex, triplex or fourplex.
If you pass that litmus test you then need to find out when the publication of the Sheriff’s (i.e. Foreclosure) Sale occurred. You must complete the postponement affidavit and have it notarized. The affidavit will need to be filed at least 15 days before the scheduled sheriff’s sale.
In order to postpone the Sheriff’s sale you must complete the following steps:
1. Execute four copies of the required affidavit and have them notarized. You must attache a cop of the Notice of Mortgage Foreclosure Sale to each copy. A sample affidavit is available from our office by emailing Administrator@MaryAliceShort.com
2. Record the affidavit at the county recorder or registrar of title where the mortgage is recorded. You will be charged a fee for recording the affidavit that ranges from $45 to $50. You will then need to get three copies of the affidavit stamped with the recording date and location. You may have to pay additional fees for copies of the affidavit.
3. File a copy of the recorded affidavit with the sheriff conducting the foreclosure sale. Include a copy of the Notice of Mortgage Foreclosure Sale. Contact the sheriff’s office in your county to determine the process for doing this.
4. Deliver a copy of the recorded affidavit with the attorney conducting the foreclosure process. Include a copy of the Notice of Mortgage Foreclosure Sale. Contact the foreclosing attorney to determine the acceptable method of delivery (e.g. fax, mail, in-person, etc.)
5. Confirm receipt of the copies and the new sale date with the foreclosing attorney and sheriff’s office.
Now here is the catch. If you are unable to bring the mortgage current during the five month postponement your redemption period is shortened from six months to five weeks. This means that after the foreclosure sale you only have five weeks to vacate the property or be evicted.
You also may be giving up your opportunity to sell your property for a profit. It is not being widely advertised that many lenders are bidding less than is owed on the mortgage at the foreclosure sale. It is also typical for the bid to be less than the market value of the property. After the sheriff’s sale occurs, you may redeem the property by paying off the winning bid. If the winning bid is under market value, you may have an opportunity to sell your property and pocket the profits during the six month redemption period. If you are curious if this will work for you contact MaryAlice Short at MaryAlice@MaryAliceShort.com
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That is crazy that someone could still profit on a foreclosure. Is this very common? Do you think people may avoid short sales if word gets out that they have the potential to make money by rolling the dice? Keep up on the great content.
@Robert Zuniga: Typically my clients are folks who find themselves in foreclosure. This new law change can be used to extend the time a borrower can negotiate a short sale, loan modification, or just live a little longer without a housing payment. This law change along with the incredibly slow bank processes could potentially allow a homeowner in Minnesota to drag out the foreclosure process for over two years!
It will be interesting to see what amount of new short sale and REO activity we will be seeing here in our local Minneapolis real estate market in the coming months. Overall, I really do enjoy reading your blog however. Thanks for sharing!