Foreclosures in Minnesota

[Chris Salveson]

In Minnesota, residents aren't given a pre-foreclosure notice.  So i'm curious who owns the house after a notice of default is given?  For example, on Zillow a recently posted house was listed as a pre-foreclosure and lists an auction date in December.  Is this house still owned by the original owner until the auction is held, or is it bank-owned immediately after the letter of default is given?  

[Robert Tryon]

Chris,

A notice of default does NOT change the owner on title of the asset, it only gives notice of lien holder's intent to collect on their debt. Sometimes an asset owner in default will voluntarily give a deed in lieu to a banker in return for agreement/consideration not to pursue owner for shortfall (personal guaranty) on the debt after the asset is sold. A house going to auction or Sheriff Sale may or may not be owned by the lender/lien holder. 

Usually the owner of the house doesn't change in a foreclosure until the redemption period  is complete after the sheriff's sale. In MN owners are typically granted under law a redemption period of 6 months to pay off the debt/lien - there are exceptions to this. If the redemption period runs out after the auction/Sheriff Sale without payment, then the process of clearing title to the property begins. Under that process junior lien holders have a very short window (something like 7 days or less) to pay off all creditors ahead of them (e.g. 2nd mortgage pays off the 1st). The last lien holder standing in the process becomes the owner of the house and all other liens get cleared away thereby giving them clean title to the property. 

I am not an attorney, but I have served many years as the treasurer of a homeowners association and have had to go through the process a number of times. Hope this helps.