Bill Text: MN HF1377 | 2013-2014 | 88th Legislature | Engrossed
Bill Title: Mortgage lender and servicer loss mitigation required, and mortgage foreclosure dual tracking prohibited.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2013-05-17 - HF indefinitely postponed [HF1377 Detail]
Download: Minnesota-2013-HF1377-Engrossed.html
1.2relating to real estate; requiring loss mitigation by mortgage lenders and
1.3servicers; prohibiting mortgage foreclosure dual tracking;amending Minnesota
1.4Statutes 2012, sections 580.02; 580.041, subdivisions 1b, 2a; 580.15; proposing
1.5coding for new law in Minnesota Statutes, chapters 580; 582.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2012, section 580.02, is amended to read:
1.8580.02 REQUISITES FOR FORECLOSURE.
1.9 To entitle any party to make such foreclosure, it is requisite:
1.10 (1) that some default in a condition of such mortgage has occurred, by which the
1.11power to sell has become operative;
1.12 (2) that no action or proceeding has been instituted at law to recover the debt then
1.13remaining secured by such mortgage, or any part thereof, or, if the action or proceeding
1.14has been instituted, that the same has been discontinued, or that an execution upon the
1.15judgment rendered therein has been returned unsatisfied, in whole or in part;
1.16 (3) that the mortgage has been recorded and, if it has been assigned, that all
1.17assignments thereof have been recorded; provided, that, if the mortgage is upon registered
1.18land, it shall be sufficient if the mortgage and all assignments thereof have been duly
1.19registered;and
1.20 (4) before the notice of pendency as required under section580.032 is recorded, the
1.21party has complied with section580.021 ; and
1.22 (5) before the notice of pendency required under section 580.032 is recorded, the
1.23party has complied with section 582.043, if applicable.
2.1 Sec. 2. Minnesota Statutes 2012, section 580.041, subdivision 1b, is amended to read:
2.2 Subd. 1b. Form and delivery of foreclosure advice notice. The foreclosure advice
2.3notice required by this section must be in 14-point boldface type and must be printed on
2.4colored paper that is other than the color of the notice of foreclosure required by sections
2.5580.03
and
580.04 and the notice of redemption rights required by this section, and that
2.6does not obscure or overshadow the content of the notice. The title of the notice must
2.7be in 20-point boldface type. The notice must be on its own page. The foreclosure
2.8advice notice required by this section must be delivered with the notice of foreclosure
2.9required by sections580.03 and
580.04 . The foreclosure advice notice required by this
2.10section also must be delivered with each subsequent written communication regarding the
2.11foreclosure mailed to the mortgagor by the foreclosing party up to the day ofredemption.
2.12A foreclosing mortgagee will be deemed to have complied with this section if it sends
2.13the foreclosure advice notice required by this section at least once every 60 days during
2.14the period of the foreclosure process sale. The foreclosure advice notice required by
2.15this section must not be published.
2.16 Sec. 3. Minnesota Statutes 2012, section 580.041, subdivision 2a, is amended to read:
2.17 Subd. 2a. Content of notice of redemption rights. The notice of redemption rights
2.18required by this section must appear substantially as follows:
2.19"What Happens After the Foreclosure Sale
2.20After the sheriff's sale, you have the right to "redeem." Redeem means that you pay the
2.21amount bid for your house at the sheriff's sale, plus interest and costs, to keep your house.
2.22You can keep living in your home for a period of time after the foreclosure sale. This is
2.23called a "redemption period." The redemption period is [insert number of months] months
2.24after the sheriff's sale.
2.25At the end of the redemption period, if you do not redeem or sell, you will have to
2.26leave your home. If you do not leave, the person or company that bid on your home at the
2.27sheriff's sale has the right to file an eviction against you in court.
2.28Be Careful of Foreclosure Scams
2.29Be careful! After the foreclosure sale, people may approach you to buy your house
2.30or ask you to transfer your house to them for little or no money.
2.31Before you give up the rights to your house or sign any documents (including a
2.32deed), be sure you know how much the house sold for at the sheriff's sale and decide if
2.33you can save the house by paying the amount of the bid, plus interest and costs.
2.34How to Find Out How Much Your House Sold For at the Foreclosure Sale
3.1The amount you need to pay to redeem your house may be less than the amount you
3.2owed on the mortgage before the sale. You can learn what this amount is (and who the
3.3winning bidder at the sale was) by attending the sheriff's sale or by contacting the sheriff's
3.4office after the sale.
3.5You Can Also Sell Your House
3.6During the redemption period, if you sell your home, you must sell it for enough
3.7to pay off the winning bidder from the sheriff's sale and pay interest, fees, and other
3.8claims against the property. If there is any money left from the sale of the house after all
3.9these debts are paid, you can keep the money. You can also enter into a "short sale." A
3.10short sale is an agreement in which the lender agrees to accept less than the full amount
3.11you owe on the mortgage.
3.12Get More Information and Advice
3.13For more information and advice, contact an attorney or a mortgage
3.14foreclosure prevention counselor. You can find a mortgage foreclosure
3.15prevention counselor by contacting the Minnesota Home Ownership Center
3.16at 651-659-9336 or 866-462-6466 or www.hocmn.org or contact the United
3.17States Department of Housing and Urban Development at 1-800-569-4287 or
3.18www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search=MN#searchArea
3.19 http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?&webListAction=search&searchstate=MN
3.20 to get the phone number and location of the nearest certified counseling organization."
3.21 Sec. 4. [580.043] MORTGAGE FORECLOSURE DUAL TRACKING
3.22PROHIBITED.
3.23 Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in this
3.24subdivision have the meanings given them.
3.25(b) "Borrower" means the person who is liable on the promissory note secured by
3.26the mortgage, except that borrower does not include:
3.27(1) a person who has surrendered the mortgaged property, as evidenced by either a
3.28letter or other written notice confirming the surrender or by delivery of the keys to the
3.29property to the servicer or authorized agent; or
3.30(2) a person who has filed a bankruptcy case under United States Code, title 11,
3.31chapter 7, 11, 12, or 13, if the bankruptcy court has not entered an order closing or
3.32dismissing the bankruptcy case or granting relief from a stay of foreclosure.
3.33(c) "Complete loan modification request" means an application in connection with
3.34which a servicer has received all the information that the servicer requires from a borrower
3.35in evaluating applications for the loan modification options available to the borrower.
4.1A servicer shall exercise reasonable diligence in obtaining documents and information
4.2to complete a loan modification request.
4.3(d) "Dual tracking" means a servicer beginning or continuing a mortgage foreclosure
4.4under this chapter after the servicer has received a request by the borrower for a loan
4.5modification and has not accepted or rejected that request.
4.6(e) "Loan modification request" means a written request from a borrower to the
4.7borrower's servicer for a modification of the borrower's mortgage loan in order to prevent
4.8an anticipated foreclosure or to suspend or terminate a foreclosure that is pending.
4.9(f) "Servicer" means an entity that is responsible for interacting with the borrower,
4.10including managing the loan account on a daily basis, such as collecting and crediting
4.11periodic loan payments, managing an escrow account, or enforcing the promissory note
4.12and mortgage, either as the current owner of the promissory note or as the current owner's
4.13authorized agent.
4.14(g) "Small servicer" means a small servicer, as that term is defined in Code of
4.15Federal Regulations, title 12, section 1026.41, paragraph (e).
4.16 Subd. 2. Applicability. This section applies only to first lien mortgages subject to
4.17foreclosure under chapters 580 and 581 that are secured by owner-occupied residential
4.18real property containing no more than four dwelling units and the subject mortgage does
4.19not secure a loan for business, commercial, or agricultural purposes. For purposes of
4.20this subdivision, "owner-occupied" means that the property is the principal residence
4.21of the owner.
4.22Nothing in this section shall be construed to supersede or change a servicer's loss
4.23mitigation obligations, as that term is defined in section 582.043. In the event of a conflict
4.24between this section and section 582.043, the requirements of section 582.043 shall prevail.
4.25 Subd. 3. Prohibition; dual tracking; continuation or commencement of
4.26foreclosure after receipt of loan modification request. (a) A servicer shall not record or
4.27file the notice of pendency required under section 580.032 or a lis pendens under chapter
4.28581 unless the subject mortgage loan is more than 120 days delinquent.
4.29(b) If a borrower submits a complete loan modification request before the mortgage
4.30loan is more than 120 days delinquent or before the notice of pendency or lis pendens has
4.31been filed or recorded, a servicer must not file the notice of pendency or lis pendens unless:
4.32(1) the servicer has sent the borrower a notice that the borrower is not eligible for
4.33any loan modification option;
4.34(2) the borrower does not accept the loan modification offer within 14 days after
4.35the date of the offer;
4.36(3) the borrower rejects the loan modification option offered by the servicer; or
5.1(4) the borrower fails to perform under a loan modification agreement.
5.2 Subd. 4. Prohibition on foreclosure sale. If a borrower submits a complete loan
5.3modification request after a servicer has recorded or filed the notice of pendency required
5.4under section 580.032 or a lis pendens under chapter 581, but more than 37 days before a
5.5foreclosure sale, a servicer must not move for foreclosure judgment or order of sale, or
5.6conduct a foreclosure sale, unless:
5.7(1) the servicer has sent the borrower a notice that the borrower is not eligible for
5.8any loan modification option;
5.9(2) the borrower does not accept the loan modification offer within 14 days after
5.10the date of the offer;
5.11(3) the borrower rejects the loan modification option offered by the servicer; or
5.12(4) the borrower fails to perform under a loan modification agreement.
5.13 Subd. 5. Appeal process. If a servicer receives a complete loan modification
5.14request 90 days or more before a foreclosure sale, a servicer shall permit a borrower to
5.15appeal the servicer's determination to deny a borrower's loan modification request for
5.16any trial or permanent loan modification program available to the borrower. A servicer
5.17shall permit a borrower to make an appeal within 14 days after the servicer provides the
5.18determination regarding a loan modification option to the borrower.
5.19 Subd. 6. Independent evaluation; determination. (a) An appeal must be reviewed
5.20by different personnel than those responsible for evaluating the borrower's complete loan
5.21modification application.
5.22(b) Within 30 days of a borrower making an appeal, the servicer shall provide a
5.23notice to the borrower stating the servicer's determination of whether the servicer will
5.24offer the borrower a loan modification option based upon the appeal. A servicer may
5.25require that a borrower accept or reject an offer of a loan modification option after an
5.26appeal no earlier than 14 days after the servicer provides the notice to a borrower. A
5.27servicer's determination under this paragraph is not subject to any further appeal.
5.28 Subd. 7. Duplicative requests. A servicer is only required to comply with
5.29the requirements of this section for a single complete loan modification request for a
5.30borrower's mortgage loan account.
5.31 Subd. 8. Small servicer requirements. A small servicer is not subject to this
5.32section, except that a small servicer must not file the notice of pendency or lis pendens
5.33unless a borrower's mortgage loan obligation is more than 120 days delinquent. A small
5.34servicer must not file the notice of pendency or lis pendens and must not conduct a
5.35foreclosure sale if a borrower is performing pursuant to the terms of an agreement on a
5.36loan modification option.
6.1 Subd. 9. Affidavit. Any person may establish compliance with or inapplicability of
6.2this section by recording, with the county recorder or registrar of titles, an affidavit by
6.3a person having knowledge of the facts, stating that any notices required by this section
6.4have been delivered in compliance with this section. The affidavit and a certified copy
6.5of a recorded affidavit is prima facie evidence of the facts stated in the affidavit. The
6.6affidavit may be recorded regarding any foreclosure sale and may be recorded separately
6.7or as part of the record of a foreclosure.
6.8 Sec. 5. Minnesota Statutes 2012, section 580.15, is amended to read:
6.9580.15 PERPETUATING EVIDENCE OF SALE.
6.10Any party desiring to perpetuate the evidence of any sale made in pursuance of
6.11this chapter may procure:
6.12(1) an affidavit of the publication of the notice of sale and of any notice of
6.13postponement to be made by the printer of the newspaper in which the same was inserted
6.14or by some person in the printer's employ knowing the facts;
6.15(2) an affidavit or return of service of such notice upon the occupant of the mortgaged
6.16premises to be made by the officer or person making such service or, in case the premises
6.17were vacant or unoccupied at the time the service must be made, an affidavit or return
6.18showing that fact, to be made by the officer or person attempting to make such service;
6.19(3) an affidavit by the person foreclosing the mortgage, or that person's attorney, or
6.20someone knowing the facts, setting forth the facts relating to the military service status of
6.21the owner of the mortgaged premises at the time of sale;
6.22(4) an affidavit by the person foreclosing the mortgage, or that person's attorney,
6.23or someone having knowledge of the facts, setting forth the fact of service of notice of
6.24sale upon the secretary of the Treasury of the United States or the secretary's delegate in
6.25accordance with the provisions of Section 7425 of the Internal Revenue Code of 1954
6.26as amended by Section 109 of the Federal Tax Lien Act of 1966, and also setting forth
6.27the fact of service of notice of sale upon the commissioner of revenue of the state of
6.28Minnesota in accordance with the provisions of section270C.63, subdivision 11 . Any
6.29such affidavit recorded prior to May 16, 1967 shall be effective as prima facie evidence of
6.30the facts therein contained as though recorded subsequent to May 16, 1967;
6.31(5) an affidavit by the person foreclosing the mortgage, or that person's attorney, or
6.32someone having knowledge of the facts, setting forth the names of the persons to whom a
6.33notice of sale was mailed as provided by section580.032 ; and
6.34(6) one or more affidavits by the person foreclosing the mortgage, or that person's
6.35attorney or a person having knowledge of the facts, stating:
7.1(i) whether section580.021 ,
580.04 ,
580.041 ,
580.042 ,
582.039 ,
582.041 , or
7.2582.042
applies to the foreclosure proceedings; and
7.3(ii) if any or all of those sections apply, that all notices required under those sections
7.4have been provided; and
7.5(7) one or more affidavits by the person foreclosing the mortgage, the person's
7.6attorney, or a person having knowledge of the facts, stating:
7.7(i) whether section 582.043 applies to the foreclosure proceedings; and
7.8(ii) if section 582.043 applies, that all requirements of that section have been fully
7.9satisfied.
7.10Such affidavits and returns shall be recorded by the county recorder and they and the
7.11records thereof, and certified copies of such records, shall be prima facie evidence of the
7.12facts therein contained.
7.13The affidavit provided for in clause (3) hereof may be made and recorded for the
7.14purpose of complying with the provisions of the Servicemembers Civil Relief Act, and may
7.15be made and recorded at any time subsequent to the date of the mortgage foreclosure sale.
7.16 Sec. 6. [582.043] REQUISITE APPLICABLE TO CERTAIN FORECLOSURES.
7.17 Subdivision 1. Applicability. This section applies to foreclosures under chapters
7.18580 and 581 of first lien mortgages that are secured by owner-occupied residential real
7.19property containing no more than four dwelling units and the subject mortgage does not
7.20secure a loan for business, commercial, or agricultural purposes. For purposes of this
7.21section, "owner-occupied" means that the property is the principal residence of the owner.
7.22This section does not apply to a small servicer, as that term is defined in Code of
7.23Federal Regulations, title 12, section 1026.41, paragraph (e).
7.24 Subd. 2. Requisite. (a) No party foreclosing a mortgage may record or file the
7.25notice of pendency required under section 580.032 or serve or file a summons and
7.26complaint under chapter 581 until all loss mitigation obligations relevant to the mortgage
7.27loan being foreclosed have been fully satisfied.
7.28(b) For the purposes of this section, "loss mitigation obligations" means actions
7.29required to be taken by a residential mortgage servicer, lender, mortgagee, note owner,
7.30note holder, or any other person in connection with a residential mortgage loan to review
7.31and consider the homeowner for a loan modification or other relief intended to allow the
7.32homeowner to retain ownership of the property under:
7.33(1) state or federal law;
7.34(2) rules or regulations promulgated by the Consumer Financial Protection Bureau;
8.1(3) rules or regulations applicable to loans owned or guaranteed by the United States
8.2government, including rules and regulations issued by:
8.3(i) the Department of Housing and Urban Development and the Federal Housing
8.4Administration for FHA loans and Indian home loan guarantee loans;
8.5(ii) the Department of Veterans Affairs for VA loans; and
8.6(iii) the Department of Agriculture for Rural Housing Service loans;
8.7(4) the Home Affordable Modification Program for loans owned or guaranteed
8.8by the United States government;
8.9(5) any applicable consent, settlement, or other legal agreement, including:
8.10(i) consent judgments entered in the case entitled United States of America et al. v.
8.11Bank of America Corporation et al., filed April 4, 2012, in the United States District Court
8.12for the District of Columbia, in a civil action number 120361; and
8.13(ii) stipulations and Consent to the Issuance of an Amendment to 2011 Consent Order
8.14modifying Office of Thrift Supervision Orders No. NE-11-16 and, by reference NE-11-17;
8.15and Office of Comptroller of the Currency Consent Orders AA-EC-11-12; AA-EE-11-13;
8.16AA-EC-11-14; AA-EC-11-15; AA-EC-11-16; AA-EC-11-17; AA-EC-11-18; and 4.2
8.17AA-EC-11-19; or
8.18(6) the Making Home Affordable Program applicable to loans owned or guaranteed
8.19by Fannie Mae or Freddie Mac or loans serviced by an entity that is participating in the
8.20Making Home Affordable Program.
8.21 Subd. 3. Effective date; expiration. This section applies to foreclosures
8.22commenced on or after August 1, 2013, and before January 1, 2018. This section expires
8.23January 1, 2018.
8.24 Sec. 7. EFFECTIVE DATE.
8.25Sections 1, 5, and 6 are effective for foreclosures commenced on or after August 1,
8.262013, and before January 1, 2018, and expire on January 1, 2018.
8.27Section 2 is effective for foreclosures commenced on or after August 1, 2013.
8.28Section 3 is effective the day following final enactment.
8.29Section 4 is effective January 10, 2014.
1.3servicers; prohibiting mortgage foreclosure dual tracking;amending Minnesota
1.4Statutes 2012, sections 580.02; 580.041, subdivisions 1b, 2a; 580.15; proposing
1.5coding for new law in Minnesota Statutes, chapters 580; 582.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2012, section 580.02, is amended to read:
1.8580.02 REQUISITES FOR FORECLOSURE.
1.9 To entitle any party to make such foreclosure, it is requisite:
1.10 (1) that some default in a condition of such mortgage has occurred, by which the
1.11power to sell has become operative;
1.12 (2) that no action or proceeding has been instituted at law to recover the debt then
1.13remaining secured by such mortgage, or any part thereof, or, if the action or proceeding
1.14has been instituted, that the same has been discontinued, or that an execution upon the
1.15judgment rendered therein has been returned unsatisfied, in whole or in part;
1.16 (3) that the mortgage has been recorded and, if it has been assigned, that all
1.17assignments thereof have been recorded; provided, that, if the mortgage is upon registered
1.18land, it shall be sufficient if the mortgage and all assignments thereof have been duly
1.19registered;
1.20 (4) before the notice of pendency as required under section
1.21party has complied with section
1.22 (5) before the notice of pendency required under section 580.032 is recorded, the
1.23party has complied with section 582.043, if applicable.
2.1 Sec. 2. Minnesota Statutes 2012, section 580.041, subdivision 1b, is amended to read:
2.2 Subd. 1b. Form and delivery of foreclosure advice notice. The foreclosure advice
2.3notice required by this section must be in 14-point boldface type and must be printed on
2.4colored paper that is other than the color of the notice of foreclosure required by sections
2.6does not obscure or overshadow the content of the notice. The title of the notice must
2.7be in 20-point boldface type. The notice must be on its own page. The foreclosure
2.8advice notice required by this section must be delivered with the notice of foreclosure
2.9required by sections
2.10section also must be delivered with each subsequent written communication regarding the
2.11foreclosure mailed to the mortgagor by the foreclosing party up to the day of
2.12
2.13
2.14
2.15this section must not be published.
2.16 Sec. 3. Minnesota Statutes 2012, section 580.041, subdivision 2a, is amended to read:
2.17 Subd. 2a. Content of notice of redemption rights. The notice of redemption rights
2.18required by this section must appear substantially as follows:
2.19"What Happens After the Foreclosure Sale
2.20After the sheriff's sale, you have the right to "redeem." Redeem means that you pay the
2.21amount bid for your house at the sheriff's sale, plus interest and costs, to keep your house.
2.22You can keep living in your home for a period of time after the foreclosure sale. This is
2.23called a "redemption period." The redemption period is [insert number of months] months
2.24after the sheriff's sale.
2.25At the end of the redemption period, if you do not redeem or sell, you will have to
2.26leave your home. If you do not leave, the person or company that bid on your home at the
2.27sheriff's sale has the right to file an eviction against you in court.
2.28Be Careful of Foreclosure Scams
2.29Be careful! After the foreclosure sale, people may approach you to buy your house
2.30or ask you to transfer your house to them for little or no money.
2.31Before you give up the rights to your house or sign any documents (including a
2.32deed), be sure you know how much the house sold for at the sheriff's sale and decide if
2.33you can save the house by paying the amount of the bid, plus interest and costs.
2.34How to Find Out How Much Your House Sold For at the Foreclosure Sale
3.1The amount you need to pay to redeem your house may be less than the amount you
3.2owed on the mortgage before the sale. You can learn what this amount is (and who the
3.3winning bidder at the sale was) by attending the sheriff's sale or by contacting the sheriff's
3.4office after the sale.
3.5You Can Also Sell Your House
3.6During the redemption period, if you sell your home, you must sell it for enough
3.7to pay off the winning bidder from the sheriff's sale and pay interest, fees, and other
3.8claims against the property. If there is any money left from the sale of the house after all
3.9these debts are paid, you can keep the money. You can also enter into a "short sale." A
3.10short sale is an agreement in which the lender agrees to accept less than the full amount
3.11you owe on the mortgage.
3.12Get More Information and Advice
3.13For more information and advice, contact an attorney or a mortgage
3.14foreclosure prevention counselor. You can find a mortgage foreclosure
3.15prevention counselor by contacting the Minnesota Home Ownership Center
3.16at 651-659-9336 or 866-462-6466 or www.hocmn.org or contact the United
3.17States Department of Housing and Urban Development at 1-800-569-4287 or
3.18
3.19 http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?&webListAction=search&searchstate=MN
3.20 to get the phone number and location of the nearest certified counseling organization."
3.21 Sec. 4. [580.043] MORTGAGE FORECLOSURE DUAL TRACKING
3.22PROHIBITED.
3.23 Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in this
3.24subdivision have the meanings given them.
3.25(b) "Borrower" means the person who is liable on the promissory note secured by
3.26the mortgage, except that borrower does not include:
3.27(1) a person who has surrendered the mortgaged property, as evidenced by either a
3.28letter or other written notice confirming the surrender or by delivery of the keys to the
3.29property to the servicer or authorized agent; or
3.30(2) a person who has filed a bankruptcy case under United States Code, title 11,
3.31chapter 7, 11, 12, or 13, if the bankruptcy court has not entered an order closing or
3.32dismissing the bankruptcy case or granting relief from a stay of foreclosure.
3.33(c) "Complete loan modification request" means an application in connection with
3.34which a servicer has received all the information that the servicer requires from a borrower
3.35in evaluating applications for the loan modification options available to the borrower.
4.1A servicer shall exercise reasonable diligence in obtaining documents and information
4.2to complete a loan modification request.
4.3(d) "Dual tracking" means a servicer beginning or continuing a mortgage foreclosure
4.4under this chapter after the servicer has received a request by the borrower for a loan
4.5modification and has not accepted or rejected that request.
4.6(e) "Loan modification request" means a written request from a borrower to the
4.7borrower's servicer for a modification of the borrower's mortgage loan in order to prevent
4.8an anticipated foreclosure or to suspend or terminate a foreclosure that is pending.
4.9(f) "Servicer" means an entity that is responsible for interacting with the borrower,
4.10including managing the loan account on a daily basis, such as collecting and crediting
4.11periodic loan payments, managing an escrow account, or enforcing the promissory note
4.12and mortgage, either as the current owner of the promissory note or as the current owner's
4.13authorized agent.
4.14(g) "Small servicer" means a small servicer, as that term is defined in Code of
4.15Federal Regulations, title 12, section 1026.41, paragraph (e).
4.16 Subd. 2. Applicability. This section applies only to first lien mortgages subject to
4.17foreclosure under chapters 580 and 581 that are secured by owner-occupied residential
4.18real property containing no more than four dwelling units and the subject mortgage does
4.19not secure a loan for business, commercial, or agricultural purposes. For purposes of
4.20this subdivision, "owner-occupied" means that the property is the principal residence
4.21of the owner.
4.22Nothing in this section shall be construed to supersede or change a servicer's loss
4.23mitigation obligations, as that term is defined in section 582.043. In the event of a conflict
4.24between this section and section 582.043, the requirements of section 582.043 shall prevail.
4.25 Subd. 3. Prohibition; dual tracking; continuation or commencement of
4.26foreclosure after receipt of loan modification request. (a) A servicer shall not record or
4.27file the notice of pendency required under section 580.032 or a lis pendens under chapter
4.28581 unless the subject mortgage loan is more than 120 days delinquent.
4.29(b) If a borrower submits a complete loan modification request before the mortgage
4.30loan is more than 120 days delinquent or before the notice of pendency or lis pendens has
4.31been filed or recorded, a servicer must not file the notice of pendency or lis pendens unless:
4.32(1) the servicer has sent the borrower a notice that the borrower is not eligible for
4.33any loan modification option;
4.34(2) the borrower does not accept the loan modification offer within 14 days after
4.35the date of the offer;
4.36(3) the borrower rejects the loan modification option offered by the servicer; or
5.1(4) the borrower fails to perform under a loan modification agreement.
5.2 Subd. 4. Prohibition on foreclosure sale. If a borrower submits a complete loan
5.3modification request after a servicer has recorded or filed the notice of pendency required
5.4under section 580.032 or a lis pendens under chapter 581, but more than 37 days before a
5.5foreclosure sale, a servicer must not move for foreclosure judgment or order of sale, or
5.6conduct a foreclosure sale, unless:
5.7(1) the servicer has sent the borrower a notice that the borrower is not eligible for
5.8any loan modification option;
5.9(2) the borrower does not accept the loan modification offer within 14 days after
5.10the date of the offer;
5.11(3) the borrower rejects the loan modification option offered by the servicer; or
5.12(4) the borrower fails to perform under a loan modification agreement.
5.13 Subd. 5. Appeal process. If a servicer receives a complete loan modification
5.14request 90 days or more before a foreclosure sale, a servicer shall permit a borrower to
5.15appeal the servicer's determination to deny a borrower's loan modification request for
5.16any trial or permanent loan modification program available to the borrower. A servicer
5.17shall permit a borrower to make an appeal within 14 days after the servicer provides the
5.18determination regarding a loan modification option to the borrower.
5.19 Subd. 6. Independent evaluation; determination. (a) An appeal must be reviewed
5.20by different personnel than those responsible for evaluating the borrower's complete loan
5.21modification application.
5.22(b) Within 30 days of a borrower making an appeal, the servicer shall provide a
5.23notice to the borrower stating the servicer's determination of whether the servicer will
5.24offer the borrower a loan modification option based upon the appeal. A servicer may
5.25require that a borrower accept or reject an offer of a loan modification option after an
5.26appeal no earlier than 14 days after the servicer provides the notice to a borrower. A
5.27servicer's determination under this paragraph is not subject to any further appeal.
5.28 Subd. 7. Duplicative requests. A servicer is only required to comply with
5.29the requirements of this section for a single complete loan modification request for a
5.30borrower's mortgage loan account.
5.31 Subd. 8. Small servicer requirements. A small servicer is not subject to this
5.32section, except that a small servicer must not file the notice of pendency or lis pendens
5.33unless a borrower's mortgage loan obligation is more than 120 days delinquent. A small
5.34servicer must not file the notice of pendency or lis pendens and must not conduct a
5.35foreclosure sale if a borrower is performing pursuant to the terms of an agreement on a
5.36loan modification option.
6.1 Subd. 9. Affidavit. Any person may establish compliance with or inapplicability of
6.2this section by recording, with the county recorder or registrar of titles, an affidavit by
6.3a person having knowledge of the facts, stating that any notices required by this section
6.4have been delivered in compliance with this section. The affidavit and a certified copy
6.5of a recorded affidavit is prima facie evidence of the facts stated in the affidavit. The
6.6affidavit may be recorded regarding any foreclosure sale and may be recorded separately
6.7or as part of the record of a foreclosure.
6.8 Sec. 5. Minnesota Statutes 2012, section 580.15, is amended to read:
6.9580.15 PERPETUATING EVIDENCE OF SALE.
6.10Any party desiring to perpetuate the evidence of any sale made in pursuance of
6.11this chapter may procure:
6.12(1) an affidavit of the publication of the notice of sale and of any notice of
6.13postponement to be made by the printer of the newspaper in which the same was inserted
6.14or by some person in the printer's employ knowing the facts;
6.15(2) an affidavit or return of service of such notice upon the occupant of the mortgaged
6.16premises to be made by the officer or person making such service or, in case the premises
6.17were vacant or unoccupied at the time the service must be made, an affidavit or return
6.18showing that fact, to be made by the officer or person attempting to make such service;
6.19(3) an affidavit by the person foreclosing the mortgage, or that person's attorney, or
6.20someone knowing the facts, setting forth the facts relating to the military service status of
6.21the owner of the mortgaged premises at the time of sale;
6.22(4) an affidavit by the person foreclosing the mortgage, or that person's attorney,
6.23or someone having knowledge of the facts, setting forth the fact of service of notice of
6.24sale upon the secretary of the Treasury of the United States or the secretary's delegate in
6.25accordance with the provisions of Section 7425 of the Internal Revenue Code of 1954
6.26as amended by Section 109 of the Federal Tax Lien Act of 1966, and also setting forth
6.27the fact of service of notice of sale upon the commissioner of revenue of the state of
6.28Minnesota in accordance with the provisions of section
6.29such affidavit recorded prior to May 16, 1967 shall be effective as prima facie evidence of
6.30the facts therein contained as though recorded subsequent to May 16, 1967;
6.31(5) an affidavit by the person foreclosing the mortgage, or that person's attorney, or
6.32someone having knowledge of the facts, setting forth the names of the persons to whom a
6.33notice of sale was mailed as provided by section
6.34(6) one or more affidavits by the person foreclosing the mortgage, or that person's
6.35attorney or a person having knowledge of the facts, stating:
7.1(i) whether section
7.3(ii) if any or all of those sections apply, that all notices required under those sections
7.4have been provided; and
7.5(7) one or more affidavits by the person foreclosing the mortgage, the person's
7.6attorney, or a person having knowledge of the facts, stating:
7.7(i) whether section 582.043 applies to the foreclosure proceedings; and
7.8(ii) if section 582.043 applies, that all requirements of that section have been fully
7.9satisfied.
7.10Such affidavits and returns shall be recorded by the county recorder and they and the
7.11records thereof, and certified copies of such records, shall be prima facie evidence of the
7.12facts therein contained.
7.13The affidavit provided for in clause (3) hereof may be made and recorded for the
7.14purpose of complying with the provisions of the Servicemembers Civil Relief Act, and may
7.15be made and recorded at any time subsequent to the date of the mortgage foreclosure sale.
7.16 Sec. 6. [582.043] REQUISITE APPLICABLE TO CERTAIN FORECLOSURES.
7.17 Subdivision 1. Applicability. This section applies to foreclosures under chapters
7.18580 and 581 of first lien mortgages that are secured by owner-occupied residential real
7.19property containing no more than four dwelling units and the subject mortgage does not
7.20secure a loan for business, commercial, or agricultural purposes. For purposes of this
7.21section, "owner-occupied" means that the property is the principal residence of the owner.
7.22This section does not apply to a small servicer, as that term is defined in Code of
7.23Federal Regulations, title 12, section 1026.41, paragraph (e).
7.24 Subd. 2. Requisite. (a) No party foreclosing a mortgage may record or file the
7.25notice of pendency required under section 580.032 or serve or file a summons and
7.26complaint under chapter 581 until all loss mitigation obligations relevant to the mortgage
7.27loan being foreclosed have been fully satisfied.
7.28(b) For the purposes of this section, "loss mitigation obligations" means actions
7.29required to be taken by a residential mortgage servicer, lender, mortgagee, note owner,
7.30note holder, or any other person in connection with a residential mortgage loan to review
7.31and consider the homeowner for a loan modification or other relief intended to allow the
7.32homeowner to retain ownership of the property under:
7.33(1) state or federal law;
7.34(2) rules or regulations promulgated by the Consumer Financial Protection Bureau;
8.1(3) rules or regulations applicable to loans owned or guaranteed by the United States
8.2government, including rules and regulations issued by:
8.3(i) the Department of Housing and Urban Development and the Federal Housing
8.4Administration for FHA loans and Indian home loan guarantee loans;
8.5(ii) the Department of Veterans Affairs for VA loans; and
8.6(iii) the Department of Agriculture for Rural Housing Service loans;
8.7(4) the Home Affordable Modification Program for loans owned or guaranteed
8.8by the United States government;
8.9(5) any applicable consent, settlement, or other legal agreement, including:
8.10(i) consent judgments entered in the case entitled United States of America et al. v.
8.11Bank of America Corporation et al., filed April 4, 2012, in the United States District Court
8.12for the District of Columbia, in a civil action number 120361; and
8.13(ii) stipulations and Consent to the Issuance of an Amendment to 2011 Consent Order
8.14modifying Office of Thrift Supervision Orders No. NE-11-16 and, by reference NE-11-17;
8.15and Office of Comptroller of the Currency Consent Orders AA-EC-11-12; AA-EE-11-13;
8.16AA-EC-11-14; AA-EC-11-15; AA-EC-11-16; AA-EC-11-17; AA-EC-11-18; and 4.2
8.17AA-EC-11-19; or
8.18(6) the Making Home Affordable Program applicable to loans owned or guaranteed
8.19by Fannie Mae or Freddie Mac or loans serviced by an entity that is participating in the
8.20Making Home Affordable Program.
8.21 Subd. 3. Effective date; expiration. This section applies to foreclosures
8.22commenced on or after August 1, 2013, and before January 1, 2018. This section expires
8.23January 1, 2018.
8.24 Sec. 7. EFFECTIVE DATE.
8.25Sections 1, 5, and 6 are effective for foreclosures commenced on or after August 1,
8.262013, and before January 1, 2018, and expire on January 1, 2018.
8.27Section 2 is effective for foreclosures commenced on or after August 1, 2013.
8.28Section 3 is effective the day following final enactment.
8.29Section 4 is effective January 10, 2014.
