Bill Text: MN HF83 | 2013-2014 | 88th Legislature | Engrossed
Bill Title: Mortgage foreclosure tenant remedies, and single point of contact and various notices provided; mortgage foreclosure dual tracking prohibited, and mandatory mediation required prior to commencing a mortgage foreclosure.
Sponsorship: Partisan Bill (Democrat 12)
Status: (Introduced - Dead) 2013-04-08 - Author added Isaacson [HF83 Detail]
Download: Minnesota-2013-HF83-Engrossed.html
1.2relating to housing; providing certain tenant remedies; providing single point
1.3of contact and various notice provisions relating to mortgage foreclosures;
1.4prohibiting mortgage foreclosure dual tracking; requiring mandatory mediation
1.5prior to commencing a mortgage foreclosure;amending Minnesota Statutes
1.62012, sections 504B.151, subdivision 1; 580.021, by adding a subdivision;
1.7580.022, subdivision 1; 580.03; 580.041, subdivisions 1b, 2; proposing coding
1.8for new law in Minnesota Statutes, chapter 580.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 Section 1. Minnesota Statutes 2012, section 504B.151, subdivision 1, is amended to
1.11read:
1.12 Subdivision 1. Limitation on lease and notice to tenant. (a) Once a landlord has
1.13received notice of a contract for deed cancellation under section559.21 or notice of a
1.14mortgage foreclosure sale under chapter 580 or 582, or summons and complaint under
1.15chapter 581, the landlord may only enter into (i) a periodic residential lease agreement
1.16with a term of not more than two months or the time remaining in the contract cancellation
1.17period or the mortgagor's redemption period, whichever is less or (ii) a fixed term
1.18residential tenancy not extending beyond the cancellation period or the landlord's period
1.19of redemption until:
1.20(1) the contract for deed has been reinstated or paid in full;
1.21(2) the mortgage default has been cured and the mortgage reinstated;
1.22(3) the mortgage has been satisfied;
1.23(4) the property has been redeemed from a foreclosure sale; or
1.24(5) a receiver has been appointed.
1.25(b) Before entering into a lease under this section and accepting any rent or security
1.26deposit from a tenant, the landlord must notify the prospective tenant in writing that the
2.1landlord has received notice of a contract for deed cancellation or notice of a mortgage
2.2foreclosure sale as appropriate, and the date on which the contract cancellation period or
2.3the mortgagor's redemption period ends.
2.4(c) This section does not apply to a manufactured home park as defined in section
2.5327C.01, subdivision 5
.
2.6(d) A landlord who violates the requirements in this subdivision is liable to the lessee
2.7for a civil penalty of $500, unless the landlord falls under the exception in subdivision 2.
2.8 Sec. 2. Minnesota Statutes 2012, section 580.021, is amended by adding a subdivision
2.9to read:
2.10 Subd. 5. Single point of contact. The party foreclosing on a mortgage must provide
2.11to the mortgagor a single point of contact in each of the forms prescribed in sections
2.12580.022 and 580.041. The contact information must include a contact name, address,
2.13telephone number, and e-mail address. The party foreclosing on a mortgage must have
2.14alternative contacts to provide all of the assistance prescribed in this section when the
2.15single point of contact is not available to speak with a borrower for more than 48 hours.
2.16The party foreclosing on a mortgage must provide written notice within ten days when the
2.17single point of contact has changed. The borrower must be able to access the information
2.18included in this section and may seek a civil penalty of $500 against the party foreclosing
2.19on a mortgage for failure to comply with this section. The single point of contact must
2.20be an employee of the party foreclosing on a mortgage who can provide information
2.21concerning that borrower's situation and must:
2.22(1) be able to access all of the documents related to that borrower's loan and provide
2.23them to the borrower, if requested, in a timely manner;
2.24(2) know of the borrower's prior contact with the party foreclosing on a mortgage
2.25and track ongoing contact with the party foreclosing on a mortgage;
2.26(3) know the deadlines applicable to the borrower and provide that information
2.27if requested, including but not limited to:
2.28(i) what is owed on the borrower's loan and when it is due;
2.29(ii) if the borrower is eligible for mediation and the last date to request mediation; and
2.30(iii) when all relevant foreclosure proceedings may commence or be completed;
2.31(4) provide information about the current status of the loan; and
2.32(5) provide information on the borrower's foreclosure prevention alternatives.
2.33 Sec. 3. Minnesota Statutes 2012, section 580.022, subdivision 1, is amended to read:
3.1 Subdivision 1. Counseling form. The notice required under section580.021 ,
3.2subdivision 2,clause (2), must be printed on colored paper that is other than the color of
3.3any other document provided with it and must appear substantially as follows:
3.6Why You Are Getting This Notice
3.7YOU HAVE DEFAULTED ON A MORTGAGE OF THE HOMESTEAD
3.8PROPERTY DESCRIBED AS [Legal Description and Property Address]. THE HOLDER
3.9OF THE MORTGAGE, [Name of Holder of Mortgage] INTENDS TO FORECLOSE ON
3.10THIS PROPERTY. YOU HAVE THE RIGHT TO PARTICIPATE IN A MEDIATION
3.11HEARING WITH A NEUTRAL MEDIATOR, A REPRESENTATIVE OF [Name of
3.12Servicer], AND TO BRING AN ATTORNEY, HOUSING COUNSELOR, OR OTHER
3.13TRAINED ADVOCATE TO DETERMINE IF AN ALTERNATIVE TO FORECLOSURE
3.14CAN BE FOUND. YOU WILL RECEIVE NOTICE OF A MEDIATION HEARING
3.15THAT WILL TAKE PLACE WITHIN 20 DAYS OF THE NOTICE. YOU MUST
3.16RESPOND WITHIN TEN DAYS OF THE SCHEDULED MEDIATION IF YOU
3.17INTEND TO PARTICIPATE. IF YOU DO NOT RESPOND, THE MEDIATION
3.18HEARING WILL BE CANCELED.
3.19 We do not want you to lose your home and your equity. Government-approved
3.20nonprofit agencies are available to, if possible, help you prevent foreclosure.
3.21 We have given your contact information to an authorized foreclosure prevention
3.22counseling agency to contact you to help you prevent foreclosure.
3.23Who Are These Foreclosure Prevention Counseling Agencies
3.24 They are nonprofit agencies who are experts in housing and foreclosure prevention
3.25counseling and assistance. They are experienced in dealing with lenders and homeowners
3.26who are behind on mortgage payments and can help you understand your options and
3.27work with you to address your delinquency. They are approved by either the Minnesota
3.28Housing Finance Agency or the United States Department of Housing and Urban
3.29Development. They are not connected with us in any way.
3.30Which Agency Will Contact You
3.31 [insert name, address, and telephone number of agency]
3.32 You can also contact them directly."
3.33 Sec. 4. Minnesota Statutes 2012, section 580.03, is amended to read:
3.34580.03 NOTICE OF SALE; SERVICE ON OCCUPANT.
4.1 Six weeks' published notice shall be given that such mortgage will be foreclosed by
4.2sale of the mortgaged premises or some part thereof, and at least four weeks before the
4.3appointed time of sale a copy of such notice shall be served in like manner as a summons
4.4in a civil action in the district court upon the person in possession of the mortgaged
4.5premises, if the same are actually occupied. If there be a building on such premises used
4.6by a church or religious corporation, for its usual meetings, service upon any officer or
4.7trustee of such corporation shall be a sufficient service upon it. The notices required
4.8by sections580.041 and
580.042 must be served simultaneously with the notice of
4.9foreclosure required by this section.
4.10The notice required under this section may not be served upon the person in
4.11possession of the mortgaged property until 15 days after the mortgage servicer has sent
4.12the borrower a statement that if the borrower is a service member, or a dependent of a
4.13service member, the borrower may be entitled to certain protections under the federal
4.14Servicemembers Civil Relief Act, United States Code, Appendix 50, section 501,
4.15regarding the service member's interest rate and the risk of foreclosure, and counseling for
4.16covered service members that is available at agencies such as Military OneSource and
4.17Armed Forces Legal Assistance. This notice shall be sent via certified United States mail.
4.18The borrower is entitled to a $500 civil penalty from the mortgage servicer in a civil cause
4.19of action for failure to comply with the notice requirements in this section.
4.20EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
4.21foreclosures commenced on or after that date.
4.22 Sec. 5. Minnesota Statutes 2012, section 580.041, subdivision 1b, is amended to read:
4.23 Subd. 1b. Form and delivery of foreclosure advice notice. (a) The foreclosure
4.24advice notice required by this section must be in 14-point boldface type and must be
4.25printed on colored paper that is other than the color of the notice of foreclosure required
4.26by sections580.03 and
580.04 and the notice of redemption rights required by this section,
4.27and that does not obscure or overshadow the content of the notice. The title of the notice
4.28must be in 20-point boldface type. The notice must be on its own page. The foreclosure
4.29advice notice required by this section must be delivered with the notice of foreclosure
4.30required by sections580.03 and
580.04 . The foreclosure advice notice required by this
4.31section also must be delivered with each subsequent written communication regarding the
4.32foreclosure mailed to the mortgagor by the foreclosing party up to the day of redemption.
4.33A foreclosing mortgagee will be deemed to have complied with this section if it sends
4.34the foreclosure advice notice required by this section at least once every 60 days during
5.1the period of the foreclosure process. The foreclosure advice notice required by this
5.2section must not be published.
5.3(b) The foreclosure advice notice must provide the homeowner with a single point of
5.4contact with the party foreclosing on a mortgage as defined in section 580.021, subdivision
5.55. A borrower shall have a civil cause of action, including a $500 civil penalty against
5.6the party foreclosing on a mortgage who fails to provide a single point of contact to the
5.7borrower in the foreclosure notice.
5.8EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
5.9foreclosures commenced on or after that date.
5.10 Sec. 6. Minnesota Statutes 2012, section 580.041, subdivision 2, is amended to read:
5.11 Subd. 2. Content of foreclosure advice notice. The foreclosure advice notice
5.12required by this section must appear substantially as follows:
5.21AS OF [insert date], this lender says that you owe $[insert dollar amount] to bring
5.22your mortgage up to date (or "reinstate" your mortgage). You must pay this amount,
5.23plus interest and other costs, to keep your house from going through a sheriff's sale.
5.24The sheriff's sale is scheduled for [insert date] at [insert time] at [insert place].
5.25Mortgage foreclosure is a complex process. People may contact you with advice and
5.26offers to help "save" your home.
5.27Remember: It is important that you learn as much as you can about foreclosure and
5.28your situation. Find out about all your options before you make any agreements with
5.29anyone about the foreclosure of your home.
5.30Getting Help
5.31As soon as possible, you should contact your lender at the above number to talk
5.32about things you might be able to do to prevent foreclosure. You should also
5.33consider contacting the foreclosure prevention counselor in your area. A foreclosure
5.34prevention counselor can answer your questions, offer free advice, and help you
5.35create a plan which makes sense for your situation.
6.1Contact the Minnesota Home Ownership Center at 651-659-9336 or 866-462-6466
6.2or www.hocmn.org or contact the United States Department of Housing and Urban
6.3Development at 1-800-569-4287 or www.hud.gov to get the phone number and
6.4location of the nearest certified counseling organization. Call today. The longer you
6.5wait, the fewer options you may have for a desirable result."
6.6Changing the Date of the Sheriff's Sale
6.7You may be able to postpone the sheriff's sale on your home. If you live in your home
6.8and it has four units or less, you can postpone the sheriff's sale for five months from
6.9the original date of sale if you have a six-month redemption period, or eleven months
6.10from the original date of sale if you have a twelve-month redemption period. If you
6.11postpone the sheriff's sale, your redemption period will be reduced to five weeks.
6.12You must do all of the following things 15 days before the scheduled sheriff's sale:
6.13(1) execute a sworn affidavit of postponement;
6.14(2) record the affidavit in the county recorder or registrar of titles where the
6.15mortgage is recorded;
6.16(3) file a copy with the sheriff; and
6.17(4) provide a copy of the recorded affidavit showing the date it was recorded to the
6.18attorney foreclosing on the mortgage."
6.19EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
6.20foreclosures commenced on or after that date.
6.21 Sec. 7. [580.043] MORTGAGE FORECLOSURE DUAL TRACKING
6.22PROHIBITED.
6.23 Subdivision 1. Definitions. (a) For purposes of this section, the terms defined
6.24in this section have the meanings given.
6.25(b) "Borrower" means the individual or entity that is liable on the promissory note
6.26secured by the mortgage, except that the term does not include:
6.27(1) a person who has surrendered the mortgaged property, as evidenced by either a
6.28letter or other written notice confirming the surrender or by delivery of the keys to the
6.29property to the mortgage servicer or authorized agent; or
6.30(2) a person who has filed a bankruptcy case under United States Code, title 11,
6.31chapter 7, 11, 12, or 13, and the bankruptcy court has not entered an order closing or
6.32dismissing the bankruptcy case or granting relief from a stay of foreclosure.
6.33(c) "Complete loan modification request" means a loan modification request that
6.34contains a completed application form, documents verifying a borrower's income and
7.1assets, an explanation of the borrower's hardship, and documents verifying the borrower's
7.2tax information or a signed release for the Internal Revenue Service.
7.3(d) "Dual tracking" means a servicer beginning or continuing a mortgage foreclosure
7.4under this chapter after the servicer has received a request by the borrower for a loan
7.5modification, forbearance, payment deferral, alternate repayment plan, or deed in lieu of
7.6foreclosure and has not accepted or rejected that request.
7.7(e) "Loan modification request" means a written request from a borrower to the
7.8borrower's mortgage servicer for a modification of the borrower's mortgage loan in order
7.9to prevent an anticipated foreclosure or to suspend or terminate a foreclosure that is in
7.10progress.
7.11(f) "Mortgage servicer" means an entity that is responsible for interacting with
7.12the borrower, including managing the loan account on a daily basis, such as collecting
7.13and crediting periodic loan payments, managing an escrow account, or enforcing the
7.14promissory note and mortgage, either as the current owner of the promissory note or
7.15as the current owner's authorized agent.
7.16 Subd. 2. Applicability. This section applies to mortgage foreclosures on the basis
7.17specified in section 580.041, subdivision 1a.
7.18 Subd. 3. Prohibition; dual tracking; continuation or commencement of
7.19foreclosure after receipt of loan modification request. (a) Upon receipt by a mortgage
7.20servicer of a request for a loan modification, forbearance, payment deferral, alternate
7.21repayment plan, or deed in lieu of foreclosure from a borrower regarding a mortgage loan
7.22for which the mortgage servicer is responsible, the mortgage servicer shall not begin a
7.23foreclosure for 90 days or, if a foreclosure of the mortgage loan is in progress, must stop
7.24the foreclosure process for 90 days or until the mortgage servicer and borrower have
7.25agreed upon and entered into a signed agreement, whichever comes first. The mortgage
7.26servicer shall not start or continue a foreclosure, even after the 90 days have passed,
7.27unless: (1) the mortgage servicer has provided notice to the borrower that the borrower's
7.28request has been rejected, including an explanation for why the request was rejected; or (2)
7.29the borrower has received a copy of a loan modification, forbearance, payment deferral,
7.30alternate repayment plan, or deed in lieu of a foreclosure agreement signed by the servicer.
7.31(b) A mortgage servicer need not consider a loan modification request if the loan
7.32modification request is not a complete loan modification request as defined in subdivision
7.331, paragraph (e).
7.34 Subd. 4. Civil cause of action; dual tracking. A borrower who is the victim of
7.35dual tracking by the borrower's mortgage servicer has a civil cause of action against the
7.36mortgage servicer for any damages incurred by the borrower as a result of the dual tracking
8.1plus the borrower's reasonable attorney fees and costs. The mortgage servicer is prohibited
8.2from adding monetary judgments and awards under this section to a borrower's mortgage.
8.3 Subd. 5. Injunctive relief. A borrower may bring an action for injunctive relief to
8.4stop a foreclosure based on a material violation of this section. The injunction shall remain
8.5in place until the court determines that the mortgage service has corrected and remedied
8.6the violation or violations giving rise to the action for injunctive relief.
8.7 Subd. 6. Redemption period. The relief available in this section is available to a
8.8borrower during the redemption period under section 580.23. The failure of the mortgage
8.9servicer to comply with subdivision 3 shall annul a sheriff sale under this chapter.
8.10EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
8.11foreclosures commenced on or after that date.
8.12 Sec. 8. [580.0431] MANDATORY MEDIATION.
8.13 Subdivision 1. Mandatory mediation. This section applies to foreclosures of
8.14mortgages under chapters 580 and 581 on property consisting of one to four dwelling
8.15units, one of which the owner occupies as the owner's principal place of residency. Prior
8.16to beginning a mortgage foreclosure and before notice of the pendency under section
8.17580.032, subdivision 3, or the lis pendens for a foreclosure under chapter 581 is recorded,
8.18a party foreclosing a mortgage must participate in mandatory mediation and provide to the
8.19mortgagor information contained in a form prescribed in section 580.022, subdivision 1.
8.20The party foreclosing on a mortgage must provide all the relevant contact information for
8.21the party foreclosing on a mortgage and any representative of the party foreclosing on a
8.22mortgage who will attend the mediation and the contact information for the borrower to the
8.23Office of Administrative Hearings. The borrower must contact the Office of Administrative
8.24Hearings to confirm participation in the mediation within ten days of the scheduled
8.25mediation. The party foreclosing on a mortgage shall add a $40 fee to the borrower's loan
8.26once the borrower and party foreclosing on a mortgage have participated in mediation.
8.27 Subd. 2. Counseling. Prior to attending the mandatory mediation, the borrower
8.28must contact the foreclosure prevention counseling agency described in section 580.041,
8.29subdivisions 2 and 2a, to learn about the foreclosure prevention services available to them.
8.30 Subd. 3. Representation. (a) The borrower may have representation at the
8.31mediation conference. The representation may be an attorney, advocate, or other
8.32individual trained in housing counseling.
8.33(b) The party foreclosing on a mortgage must send a representative with the
8.34authority to negotiate a resolution.
9.1 Subd. 4. Office of Administrative Hearings. (a) The Office of Administrative
9.2Hearings shall provide mediation to parties foreclosing on a mortgage and borrowers as
9.3required in this section. The Office of Administrative Hearings shall within ten business
9.4days of receiving a request for mediation assign a mediator which may be a judge, an
9.5attorney, or other staff trained in mediation. The Office of Administrative Hearings must
9.6provide the following information to the borrower, the party foreclosing on a mortgage,
9.7and any subordinate mortgage lienholder within 20 days of receipt of the request:
9.8(1) what documents must be provided prior to mediation to the Office of
9.9Administrative Hearings;
9.10(2) when the mediation will take place;
9.11(3) where the mediation will take place;
9.12(4) who may attend the mediation; and
9.13(5) any rights and responsibilities of the parties to the mediation.
9.14(b) The Office of Administrative Hearings is immune from civil liability for actions
9.15within the scope of its position under this chapter. The mediators assigned do not have a
9.16duty to advise the parties of their legal rights. Nothing in this chapter is a limitation
9.17to the immunity that otherwise extends to the Office of Administrative Hearings that
9.18otherwise exists under the law.
9.19(c) The mediation must occur no later than 45 days after receiving contact
9.20from the party foreclosing on a mortgage requesting the mediation with the Office of
9.21Administrative Hearings.
9.22(d) The data regarding the finances and mortgages for these mediations that is
9.23created, collected, and maintained by the Office of Administrative Hearings is private data
9.24on individuals as defined by section 13.02, subdivision 12.
9.25(e) A mediation agreement signed by both parties may be submitted to any court
9.26having jurisdiction over the parties and shall be enforced by any court having jurisdiction
9.27over the parties.
9.28(f) The party foreclosing on a mortgage shall submit a mediation fee of $160 to the
9.29Office of Administrative Hearings at or before the initial mediation meeting.
9.30 Subd. 5. Disposition of fees. Mediation fees collected by the Office of
9.31Administrative Hearings under this section must be deposited in the administrative
9.32hearings account in the state treasury and are appropriated to the office for the purposes
9.33of this section.
9.34 Subd. 6. Good faith required. (a) The parties must engage in mediation in good
9.35faith. Not participating in good faith includes:
9.36(1) failure to attend and participate in mediation sessions without cause;
10.1(2) failure to provide full information regarding the financial obligations of the
10.2parties and other creditors including: a promissory note, contracts for debt, statement of
10.3interest rates on the debts, delinquent payments, unpaid principal balance, a list of all
10.4collateral securing debts, a creditor's estimate of the value of the collateral, and debt
10.5restructuring programs available from the creditor;
10.6(3) failure of the party foreclosing on a mortgage to designate a representative to
10.7participate in the mediation with authority to make binding commitments;
10.8(4) lack of a written statement of debt restructuring alternatives and a statement of
10.9reasons why alternatives are unacceptable to one of the parties; and
10.10(5) other similar behavior that evidences lack of good faith by a party.
10.11A failure to agree to reduce, restructure, refinance, or forgive debt is not, in itself, evidence
10.12of lack of good faith by the creditor.
10.13(b) If the mediator determines that either party is not participating in good faith the
10.14mediator must file an affidavit indicating the reasons for the finding with the attorney
10.15general and with parties to the mediation.
10.16 Subd. 7. Party foreclosing on a mortgage; bad faith; court supervision. If the
10.17mediator finds the party foreclosing on a mortgage has not participated in mediation in
10.18good faith, the debtor may require court-supervised mandatory mediation by filing the
10.19affidavit with the district court of the county of the debtor's residence with a request for
10.20court supervision of mediation and serving a copy of the request on the creditor. Upon
10.21request, the court shall require both parties to mediate under the supervision of the court in
10.22good faith for a period of not more than 180 days. All mortgage foreclosure proceedings
10.23must be suspended during this period. The court may issue orders necessary to effect good
10.24faith mediation. Following the mediation period, if the court finds the party foreclosing
10.25on a mortgage has not participated in mediation in good faith, the court shall by order
10.26suspend the mortgage foreclosure proceeding for an additional period of 180 days. A party
10.27foreclosing on a mortgage found by the mediator not to have participated in good faith
10.28shall pay the attorney fees and costs of the debtor requesting court supervision, in addition
10.29to further suspension of the mortgage foreclosure proceeding.
10.30 Subd. 8. Debtor's lack of good faith. A party foreclosing on a mortgage may
10.31immediately proceed with the mortgage foreclosure proceedings upon receipt of a
10.32mediator's affidavit of a debtor's lack of good faith.
10.33 Subd. 9. Review of good faith finding. (a) Upon petition by a debtor or the
10.34party foreclosing on a mortgage, a court may review a mediator's affidavit of lack of
10.35good faith or a mediator's failure to file an affidavit of lack of good faith. The review is
10.36limited to whether the mediator committed an abuse of discretion in filing or failing to
11.1file an affidavit of lack of good faith. The petition must be reviewed by the court within
11.2ten days after the petition is filed.
11.3 (b) If the court finds that the mediator committed an abuse of discretion in filing, or
11.4failing to file, an affidavit of lack of good faith, the court may:
11.5 (1) reinstate mediation and the stay of mortgage foreclosure proceeding;
11.6 (2) order court supervised mediation; or
11.7 (3) allow the party foreclosing on a mortgage to proceed immediately with a
11.8mortgage foreclosure proceeding.
11.9 Subd. 10. Creditor not attending mediation meeting. (a) A party foreclosing on
11.10a mortgage that is notified of the initial mediation meeting is subject to and bound by a
11.11mediation agreement if the party foreclosing on a mortgage does not attend mediation
11.12meetings, unless the party foreclosing on a mortgage files a claim form. In lieu of
11.13attending a mediation meeting, a creditor may file a claim form with the mediator before
11.14the scheduled meeting. By filing a claim form, the party foreclosing on a mortgage
11.15agrees to be bound by a mediation agreement reached at the mediation meeting unless an
11.16objection is filed within ten days. The mediator must notify the party foreclosing on a
11.17mortgage who has filed claim forms of the terms of any agreement.
11.18 (b) A party foreclosing on a mortgage who has filed a claim form may serve a
11.19written objection to the terms of the mediation agreement on the mediator and the debtor
11.20within ten days of receiving notice of the mediation agreement. If a party foreclosing on
11.21a mortgage files an objection to the terms of a mediation agreement, the mediator shall
11.22meet with the debtor and party foreclosing on a mortgage within ten days of receiving
11.23the objection. If an objection is served, the mediator shall schedule a mediation meeting
11.24during the ten-day period following receipt of the objection.
11.25 Subd. 11. Inconsistent laws. The provisions of this section have precedence over
11.26any inconsistent or conflicting laws and statutes, including chapters 336, 580, and 581.
11.27EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
11.28foreclosures commenced on or after that date.
1.3of contact and various notice provisions relating to mortgage foreclosures;
1.4prohibiting mortgage foreclosure dual tracking; requiring mandatory mediation
1.5prior to commencing a mortgage foreclosure;amending Minnesota Statutes
1.62012, sections 504B.151, subdivision 1; 580.021, by adding a subdivision;
1.7580.022, subdivision 1; 580.03; 580.041, subdivisions 1b, 2; proposing coding
1.8for new law in Minnesota Statutes, chapter 580.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 Section 1. Minnesota Statutes 2012, section 504B.151, subdivision 1, is amended to
1.11read:
1.12 Subdivision 1. Limitation on lease and notice to tenant. (a) Once a landlord has
1.13received notice of a contract for deed cancellation under section
1.14mortgage foreclosure sale under chapter 580 or 582, or summons and complaint under
1.15chapter 581, the landlord may only enter into (i) a periodic residential lease agreement
1.16with a term of not more than two months or the time remaining in the contract cancellation
1.17period or the mortgagor's redemption period, whichever is less or (ii) a fixed term
1.18residential tenancy not extending beyond the cancellation period or the landlord's period
1.19of redemption until:
1.20(1) the contract for deed has been reinstated or paid in full;
1.21(2) the mortgage default has been cured and the mortgage reinstated;
1.22(3) the mortgage has been satisfied;
1.23(4) the property has been redeemed from a foreclosure sale; or
1.24(5) a receiver has been appointed.
1.25(b) Before entering into a lease under this section and accepting any rent or security
1.26deposit from a tenant, the landlord must notify the prospective tenant in writing that the
2.1landlord has received notice of a contract for deed cancellation or notice of a mortgage
2.2foreclosure sale as appropriate, and the date on which the contract cancellation period or
2.3the mortgagor's redemption period ends.
2.4(c) This section does not apply to a manufactured home park as defined in section
2.6(d) A landlord who violates the requirements in this subdivision is liable to the lessee
2.7for a civil penalty of $500, unless the landlord falls under the exception in subdivision 2.
2.8 Sec. 2. Minnesota Statutes 2012, section 580.021, is amended by adding a subdivision
2.9to read:
2.10 Subd. 5. Single point of contact. The party foreclosing on a mortgage must provide
2.11to the mortgagor a single point of contact in each of the forms prescribed in sections
2.12580.022 and 580.041. The contact information must include a contact name, address,
2.13telephone number, and e-mail address. The party foreclosing on a mortgage must have
2.14alternative contacts to provide all of the assistance prescribed in this section when the
2.15single point of contact is not available to speak with a borrower for more than 48 hours.
2.16The party foreclosing on a mortgage must provide written notice within ten days when the
2.17single point of contact has changed. The borrower must be able to access the information
2.18included in this section and may seek a civil penalty of $500 against the party foreclosing
2.19on a mortgage for failure to comply with this section. The single point of contact must
2.20be an employee of the party foreclosing on a mortgage who can provide information
2.21concerning that borrower's situation and must:
2.22(1) be able to access all of the documents related to that borrower's loan and provide
2.23them to the borrower, if requested, in a timely manner;
2.24(2) know of the borrower's prior contact with the party foreclosing on a mortgage
2.25and track ongoing contact with the party foreclosing on a mortgage;
2.26(3) know the deadlines applicable to the borrower and provide that information
2.27if requested, including but not limited to:
2.28(i) what is owed on the borrower's loan and when it is due;
2.29(ii) if the borrower is eligible for mediation and the last date to request mediation; and
2.30(iii) when all relevant foreclosure proceedings may commence or be completed;
2.31(4) provide information about the current status of the loan; and
2.32(5) provide information on the borrower's foreclosure prevention alternatives.
2.33 Sec. 3. Minnesota Statutes 2012, section 580.022, subdivision 1, is amended to read:
3.1 Subdivision 1. Counseling form. The notice required under section
3.2subdivision 2,
3.3any other document provided with it and must appear substantially as follows:
3.6Why You Are Getting This Notice
3.7YOU HAVE DEFAULTED ON A MORTGAGE OF THE HOMESTEAD
3.8PROPERTY DESCRIBED AS [Legal Description and Property Address]. THE HOLDER
3.9OF THE MORTGAGE, [Name of Holder of Mortgage] INTENDS TO FORECLOSE ON
3.10THIS PROPERTY. YOU HAVE THE RIGHT TO PARTICIPATE IN A MEDIATION
3.11HEARING WITH A NEUTRAL MEDIATOR, A REPRESENTATIVE OF [Name of
3.12Servicer], AND TO BRING AN ATTORNEY, HOUSING COUNSELOR, OR OTHER
3.13TRAINED ADVOCATE TO DETERMINE IF AN ALTERNATIVE TO FORECLOSURE
3.14CAN BE FOUND. YOU WILL RECEIVE NOTICE OF A MEDIATION HEARING
3.15THAT WILL TAKE PLACE WITHIN 20 DAYS OF THE NOTICE. YOU MUST
3.16RESPOND WITHIN TEN DAYS OF THE SCHEDULED MEDIATION IF YOU
3.17INTEND TO PARTICIPATE. IF YOU DO NOT RESPOND, THE MEDIATION
3.18HEARING WILL BE CANCELED.
3.19 We do not want you to lose your home and your equity. Government-approved
3.20nonprofit agencies are available to, if possible, help you prevent foreclosure.
3.21 We have given your contact information to an authorized foreclosure prevention
3.22counseling agency to contact you to help you prevent foreclosure.
3.23Who Are These Foreclosure Prevention Counseling Agencies
3.24 They are nonprofit agencies who are experts in housing and foreclosure prevention
3.25counseling and assistance. They are experienced in dealing with lenders and homeowners
3.26who are behind on mortgage payments and can help you understand your options and
3.27work with you to address your delinquency. They are approved by either the Minnesota
3.28Housing Finance Agency or the United States Department of Housing and Urban
3.29Development. They are not connected with us in any way.
3.30Which Agency Will Contact You
3.31 [insert name, address, and telephone number of agency]
3.32 You can also contact them directly."
3.33 Sec. 4. Minnesota Statutes 2012, section 580.03, is amended to read:
3.34580.03 NOTICE OF SALE; SERVICE ON OCCUPANT.
4.1 Six weeks' published notice shall be given that such mortgage will be foreclosed by
4.2sale of the mortgaged premises or some part thereof, and at least four weeks before the
4.3appointed time of sale a copy of such notice shall be served in like manner as a summons
4.4in a civil action in the district court upon the person in possession of the mortgaged
4.5premises, if the same are actually occupied. If there be a building on such premises used
4.6by a church or religious corporation, for its usual meetings, service upon any officer or
4.7trustee of such corporation shall be a sufficient service upon it. The notices required
4.8by sections
4.9foreclosure required by this section.
4.10The notice required under this section may not be served upon the person in
4.11possession of the mortgaged property until 15 days after the mortgage servicer has sent
4.12the borrower a statement that if the borrower is a service member, or a dependent of a
4.13service member, the borrower may be entitled to certain protections under the federal
4.14Servicemembers Civil Relief Act, United States Code, Appendix 50, section 501,
4.15regarding the service member's interest rate and the risk of foreclosure, and counseling for
4.16covered service members that is available at agencies such as Military OneSource and
4.17Armed Forces Legal Assistance. This notice shall be sent via certified United States mail.
4.18The borrower is entitled to a $500 civil penalty from the mortgage servicer in a civil cause
4.19of action for failure to comply with the notice requirements in this section.
4.20EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
4.21foreclosures commenced on or after that date.
4.22 Sec. 5. Minnesota Statutes 2012, section 580.041, subdivision 1b, is amended to read:
4.23 Subd. 1b. Form and delivery of foreclosure advice notice. (a) The foreclosure
4.24advice notice required by this section must be in 14-point boldface type and must be
4.25printed on colored paper that is other than the color of the notice of foreclosure required
4.26by sections
4.27and that does not obscure or overshadow the content of the notice. The title of the notice
4.28must be in 20-point boldface type. The notice must be on its own page. The foreclosure
4.29advice notice required by this section must be delivered with the notice of foreclosure
4.30required by sections
4.31section also must be delivered with each subsequent written communication regarding the
4.32foreclosure mailed to the mortgagor by the foreclosing party up to the day of redemption.
4.33A foreclosing mortgagee will be deemed to have complied with this section if it sends
4.34the foreclosure advice notice required by this section at least once every 60 days during
5.1the period of the foreclosure process. The foreclosure advice notice required by this
5.2section must not be published.
5.3(b) The foreclosure advice notice must provide the homeowner with a single point of
5.4contact with the party foreclosing on a mortgage as defined in section 580.021, subdivision
5.55. A borrower shall have a civil cause of action, including a $500 civil penalty against
5.6the party foreclosing on a mortgage who fails to provide a single point of contact to the
5.7borrower in the foreclosure notice.
5.8EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
5.9foreclosures commenced on or after that date.
5.10 Sec. 6. Minnesota Statutes 2012, section 580.041, subdivision 2, is amended to read:
5.11 Subd. 2. Content of foreclosure advice notice. The foreclosure advice notice
5.12required by this section must appear substantially as follows:
5.21AS OF [insert date], this lender says that you owe $[insert dollar amount] to bring
5.22your mortgage up to date (or "reinstate" your mortgage). You must pay this amount,
5.23plus interest and other costs, to keep your house from going through a sheriff's sale.
5.24The sheriff's sale is scheduled for [insert date] at [insert time] at [insert place].
5.25Mortgage foreclosure is a complex process. People may contact you with advice and
5.26offers to help "save" your home.
5.27Remember: It is important that you learn as much as you can about foreclosure and
5.28your situation. Find out about all your options before you make any agreements with
5.29anyone about the foreclosure of your home.
5.30Getting Help
5.31As soon as possible, you should contact your lender at the above number to talk
5.32about things you might be able to do to prevent foreclosure. You should also
5.33consider contacting the foreclosure prevention counselor in your area. A foreclosure
5.34prevention counselor can answer your questions, offer free advice, and help you
5.35create a plan which makes sense for your situation.
6.1Contact the Minnesota Home Ownership Center at 651-659-9336 or 866-462-6466
6.2or www.hocmn.org or contact the United States Department of Housing and Urban
6.3Development at 1-800-569-4287 or www.hud.gov to get the phone number and
6.4location of the nearest certified counseling organization. Call today. The longer you
6.5wait, the fewer options you may have for a desirable result.
6.6Changing the Date of the Sheriff's Sale
6.7You may be able to postpone the sheriff's sale on your home. If you live in your home
6.8and it has four units or less, you can postpone the sheriff's sale for five months from
6.9the original date of sale if you have a six-month redemption period, or eleven months
6.10from the original date of sale if you have a twelve-month redemption period. If you
6.11postpone the sheriff's sale, your redemption period will be reduced to five weeks.
6.12You must do all of the following things 15 days before the scheduled sheriff's sale:
6.13(1) execute a sworn affidavit of postponement;
6.14(2) record the affidavit in the county recorder or registrar of titles where the
6.15mortgage is recorded;
6.16(3) file a copy with the sheriff; and
6.17(4) provide a copy of the recorded affidavit showing the date it was recorded to the
6.18attorney foreclosing on the mortgage."
6.19EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
6.20foreclosures commenced on or after that date.
6.21 Sec. 7. [580.043] MORTGAGE FORECLOSURE DUAL TRACKING
6.22PROHIBITED.
6.23 Subdivision 1. Definitions. (a) For purposes of this section, the terms defined
6.24in this section have the meanings given.
6.25(b) "Borrower" means the individual or entity that is liable on the promissory note
6.26secured by the mortgage, except that the term does not include:
6.27(1) a person who has surrendered the mortgaged property, as evidenced by either a
6.28letter or other written notice confirming the surrender or by delivery of the keys to the
6.29property to the mortgage servicer or authorized agent; or
6.30(2) a person who has filed a bankruptcy case under United States Code, title 11,
6.31chapter 7, 11, 12, or 13, and the bankruptcy court has not entered an order closing or
6.32dismissing the bankruptcy case or granting relief from a stay of foreclosure.
6.33(c) "Complete loan modification request" means a loan modification request that
6.34contains a completed application form, documents verifying a borrower's income and
7.1assets, an explanation of the borrower's hardship, and documents verifying the borrower's
7.2tax information or a signed release for the Internal Revenue Service.
7.3(d) "Dual tracking" means a servicer beginning or continuing a mortgage foreclosure
7.4under this chapter after the servicer has received a request by the borrower for a loan
7.5modification, forbearance, payment deferral, alternate repayment plan, or deed in lieu of
7.6foreclosure and has not accepted or rejected that request.
7.7(e) "Loan modification request" means a written request from a borrower to the
7.8borrower's mortgage servicer for a modification of the borrower's mortgage loan in order
7.9to prevent an anticipated foreclosure or to suspend or terminate a foreclosure that is in
7.10progress.
7.11(f) "Mortgage servicer" means an entity that is responsible for interacting with
7.12the borrower, including managing the loan account on a daily basis, such as collecting
7.13and crediting periodic loan payments, managing an escrow account, or enforcing the
7.14promissory note and mortgage, either as the current owner of the promissory note or
7.15as the current owner's authorized agent.
7.16 Subd. 2. Applicability. This section applies to mortgage foreclosures on the basis
7.17specified in section 580.041, subdivision 1a.
7.18 Subd. 3. Prohibition; dual tracking; continuation or commencement of
7.19foreclosure after receipt of loan modification request. (a) Upon receipt by a mortgage
7.20servicer of a request for a loan modification, forbearance, payment deferral, alternate
7.21repayment plan, or deed in lieu of foreclosure from a borrower regarding a mortgage loan
7.22for which the mortgage servicer is responsible, the mortgage servicer shall not begin a
7.23foreclosure for 90 days or, if a foreclosure of the mortgage loan is in progress, must stop
7.24the foreclosure process for 90 days or until the mortgage servicer and borrower have
7.25agreed upon and entered into a signed agreement, whichever comes first. The mortgage
7.26servicer shall not start or continue a foreclosure, even after the 90 days have passed,
7.27unless: (1) the mortgage servicer has provided notice to the borrower that the borrower's
7.28request has been rejected, including an explanation for why the request was rejected; or (2)
7.29the borrower has received a copy of a loan modification, forbearance, payment deferral,
7.30alternate repayment plan, or deed in lieu of a foreclosure agreement signed by the servicer.
7.31(b) A mortgage servicer need not consider a loan modification request if the loan
7.32modification request is not a complete loan modification request as defined in subdivision
7.331, paragraph (e).
7.34 Subd. 4. Civil cause of action; dual tracking. A borrower who is the victim of
7.35dual tracking by the borrower's mortgage servicer has a civil cause of action against the
7.36mortgage servicer for any damages incurred by the borrower as a result of the dual tracking
8.1plus the borrower's reasonable attorney fees and costs. The mortgage servicer is prohibited
8.2from adding monetary judgments and awards under this section to a borrower's mortgage.
8.3 Subd. 5. Injunctive relief. A borrower may bring an action for injunctive relief to
8.4stop a foreclosure based on a material violation of this section. The injunction shall remain
8.5in place until the court determines that the mortgage service has corrected and remedied
8.6the violation or violations giving rise to the action for injunctive relief.
8.7 Subd. 6. Redemption period. The relief available in this section is available to a
8.8borrower during the redemption period under section 580.23. The failure of the mortgage
8.9servicer to comply with subdivision 3 shall annul a sheriff sale under this chapter.
8.10EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
8.11foreclosures commenced on or after that date.
8.12 Sec. 8. [580.0431] MANDATORY MEDIATION.
8.13 Subdivision 1. Mandatory mediation. This section applies to foreclosures of
8.14mortgages under chapters 580 and 581 on property consisting of one to four dwelling
8.15units, one of which the owner occupies as the owner's principal place of residency. Prior
8.16to beginning a mortgage foreclosure and before notice of the pendency under section
8.17580.032, subdivision 3, or the lis pendens for a foreclosure under chapter 581 is recorded,
8.18a party foreclosing a mortgage must participate in mandatory mediation and provide to the
8.19mortgagor information contained in a form prescribed in section 580.022, subdivision 1.
8.20The party foreclosing on a mortgage must provide all the relevant contact information for
8.21the party foreclosing on a mortgage and any representative of the party foreclosing on a
8.22mortgage who will attend the mediation and the contact information for the borrower to the
8.23Office of Administrative Hearings. The borrower must contact the Office of Administrative
8.24Hearings to confirm participation in the mediation within ten days of the scheduled
8.25mediation. The party foreclosing on a mortgage shall add a $40 fee to the borrower's loan
8.26once the borrower and party foreclosing on a mortgage have participated in mediation.
8.27 Subd. 2. Counseling. Prior to attending the mandatory mediation, the borrower
8.28must contact the foreclosure prevention counseling agency described in section 580.041,
8.29subdivisions 2 and 2a, to learn about the foreclosure prevention services available to them.
8.30 Subd. 3. Representation. (a) The borrower may have representation at the
8.31mediation conference. The representation may be an attorney, advocate, or other
8.32individual trained in housing counseling.
8.33(b) The party foreclosing on a mortgage must send a representative with the
8.34authority to negotiate a resolution.
9.1 Subd. 4. Office of Administrative Hearings. (a) The Office of Administrative
9.2Hearings shall provide mediation to parties foreclosing on a mortgage and borrowers as
9.3required in this section. The Office of Administrative Hearings shall within ten business
9.4days of receiving a request for mediation assign a mediator which may be a judge, an
9.5attorney, or other staff trained in mediation. The Office of Administrative Hearings must
9.6provide the following information to the borrower, the party foreclosing on a mortgage,
9.7and any subordinate mortgage lienholder within 20 days of receipt of the request:
9.8(1) what documents must be provided prior to mediation to the Office of
9.9Administrative Hearings;
9.10(2) when the mediation will take place;
9.11(3) where the mediation will take place;
9.12(4) who may attend the mediation; and
9.13(5) any rights and responsibilities of the parties to the mediation.
9.14(b) The Office of Administrative Hearings is immune from civil liability for actions
9.15within the scope of its position under this chapter. The mediators assigned do not have a
9.16duty to advise the parties of their legal rights. Nothing in this chapter is a limitation
9.17to the immunity that otherwise extends to the Office of Administrative Hearings that
9.18otherwise exists under the law.
9.19(c) The mediation must occur no later than 45 days after receiving contact
9.20from the party foreclosing on a mortgage requesting the mediation with the Office of
9.21Administrative Hearings.
9.22(d) The data regarding the finances and mortgages for these mediations that is
9.23created, collected, and maintained by the Office of Administrative Hearings is private data
9.24on individuals as defined by section 13.02, subdivision 12.
9.25(e) A mediation agreement signed by both parties may be submitted to any court
9.26having jurisdiction over the parties and shall be enforced by any court having jurisdiction
9.27over the parties.
9.28(f) The party foreclosing on a mortgage shall submit a mediation fee of $160 to the
9.29Office of Administrative Hearings at or before the initial mediation meeting.
9.30 Subd. 5. Disposition of fees. Mediation fees collected by the Office of
9.31Administrative Hearings under this section must be deposited in the administrative
9.32hearings account in the state treasury and are appropriated to the office for the purposes
9.33of this section.
9.34 Subd. 6. Good faith required. (a) The parties must engage in mediation in good
9.35faith. Not participating in good faith includes:
9.36(1) failure to attend and participate in mediation sessions without cause;
10.1(2) failure to provide full information regarding the financial obligations of the
10.2parties and other creditors including: a promissory note, contracts for debt, statement of
10.3interest rates on the debts, delinquent payments, unpaid principal balance, a list of all
10.4collateral securing debts, a creditor's estimate of the value of the collateral, and debt
10.5restructuring programs available from the creditor;
10.6(3) failure of the party foreclosing on a mortgage to designate a representative to
10.7participate in the mediation with authority to make binding commitments;
10.8(4) lack of a written statement of debt restructuring alternatives and a statement of
10.9reasons why alternatives are unacceptable to one of the parties; and
10.10(5) other similar behavior that evidences lack of good faith by a party.
10.11A failure to agree to reduce, restructure, refinance, or forgive debt is not, in itself, evidence
10.12of lack of good faith by the creditor.
10.13(b) If the mediator determines that either party is not participating in good faith the
10.14mediator must file an affidavit indicating the reasons for the finding with the attorney
10.15general and with parties to the mediation.
10.16 Subd. 7. Party foreclosing on a mortgage; bad faith; court supervision. If the
10.17mediator finds the party foreclosing on a mortgage has not participated in mediation in
10.18good faith, the debtor may require court-supervised mandatory mediation by filing the
10.19affidavit with the district court of the county of the debtor's residence with a request for
10.20court supervision of mediation and serving a copy of the request on the creditor. Upon
10.21request, the court shall require both parties to mediate under the supervision of the court in
10.22good faith for a period of not more than 180 days. All mortgage foreclosure proceedings
10.23must be suspended during this period. The court may issue orders necessary to effect good
10.24faith mediation. Following the mediation period, if the court finds the party foreclosing
10.25on a mortgage has not participated in mediation in good faith, the court shall by order
10.26suspend the mortgage foreclosure proceeding for an additional period of 180 days. A party
10.27foreclosing on a mortgage found by the mediator not to have participated in good faith
10.28shall pay the attorney fees and costs of the debtor requesting court supervision, in addition
10.29to further suspension of the mortgage foreclosure proceeding.
10.30 Subd. 8. Debtor's lack of good faith. A party foreclosing on a mortgage may
10.31immediately proceed with the mortgage foreclosure proceedings upon receipt of a
10.32mediator's affidavit of a debtor's lack of good faith.
10.33 Subd. 9. Review of good faith finding. (a) Upon petition by a debtor or the
10.34party foreclosing on a mortgage, a court may review a mediator's affidavit of lack of
10.35good faith or a mediator's failure to file an affidavit of lack of good faith. The review is
10.36limited to whether the mediator committed an abuse of discretion in filing or failing to
11.1file an affidavit of lack of good faith. The petition must be reviewed by the court within
11.2ten days after the petition is filed.
11.3 (b) If the court finds that the mediator committed an abuse of discretion in filing, or
11.4failing to file, an affidavit of lack of good faith, the court may:
11.5 (1) reinstate mediation and the stay of mortgage foreclosure proceeding;
11.6 (2) order court supervised mediation; or
11.7 (3) allow the party foreclosing on a mortgage to proceed immediately with a
11.8mortgage foreclosure proceeding.
11.9 Subd. 10. Creditor not attending mediation meeting. (a) A party foreclosing on
11.10a mortgage that is notified of the initial mediation meeting is subject to and bound by a
11.11mediation agreement if the party foreclosing on a mortgage does not attend mediation
11.12meetings, unless the party foreclosing on a mortgage files a claim form. In lieu of
11.13attending a mediation meeting, a creditor may file a claim form with the mediator before
11.14the scheduled meeting. By filing a claim form, the party foreclosing on a mortgage
11.15agrees to be bound by a mediation agreement reached at the mediation meeting unless an
11.16objection is filed within ten days. The mediator must notify the party foreclosing on a
11.17mortgage who has filed claim forms of the terms of any agreement.
11.18 (b) A party foreclosing on a mortgage who has filed a claim form may serve a
11.19written objection to the terms of the mediation agreement on the mediator and the debtor
11.20within ten days of receiving notice of the mediation agreement. If a party foreclosing on
11.21a mortgage files an objection to the terms of a mediation agreement, the mediator shall
11.22meet with the debtor and party foreclosing on a mortgage within ten days of receiving
11.23the objection. If an objection is served, the mediator shall schedule a mediation meeting
11.24during the ten-day period following receipt of the objection.
11.25 Subd. 11. Inconsistent laws. The provisions of this section have precedence over
11.26any inconsistent or conflicting laws and statutes, including chapters 336, 580, and 581.
11.27EFFECTIVE DATE.This section is effective August 1, 2013, and applies to
11.28foreclosures commenced on or after that date.
