John Murphy Reports

Effective June 15, 2009, Minnesota had a major change in it’s foreclosure law.  Homeowners who are behind on payments can now petition to have the Sheriff’s sale delayed by 5 more months.  That effectively eats in to nearly the entire redemption period.

DISCLAIMER: this is not to be considered legal advice.  Please seek legal counsel if you have questions regarding your foreclosure or how you might go about pushing out the Sheriff’s sale.

The way I see this, homeowners can now delay the Sheriff’s sale and actually keep that off their credit report provided they can figure out a way how to get out from under their property.  This new law, disguised to help homeowners perhaps avoid foreclosure, looks like it will benefit many local attorneys as they may be called upon to file the petition and stop the foreclosure.  It’s likely to cost a homeowner $400-$750 to seek the advice of an attorney and to file the paperwork necessary to extend the foreclosure date.

However, this new law will also allow homeowners more time to sell their home in a short sale.  I am hearing more and more information that banks are trying…trying is the qualifying word, to move toward a short sale model rather than take back a few million REO properties.  I’ll have more on this as I hear it.

For more information about the new Minnesota foreclosure postponement law, the Minnesota Home Ownership Center has some excellent information.  Here is their excellent Q&A.  The Minnesota Home Ownership Center has provided a Sample Affidavit for the Postponement of Foreclosure.  The center also has a list of Minnesota foreclosure counselors…click here for a statewide list by county.

Homeowners in Minnesota who are behind on their payments, may face a Sheriff’s sale 6 months after they miss their first payment.  Usually a Notice of Default (NOD) is published at the county and is then advertised in a local legal newspaper.  That occurs 5-6 weeks before the Sheriff’s sale.  In order to take advantage of this new law, homeowners will need to file the affidavit for postponement of foreclosure with the county recorder at least 2 weeks prior to the Sheriff’s sale date.

The Star Tribune covered this new law in a story a few weeks ago.

In speaking with the Hennepin County Recording Deputies as well as Erin, who handles the foreclosures in the Sheriff’s department, they are recommending that when you file the Affidavit with the Country Recorder, make sure you get two certified copies and immediately bring one down to the Sheriff’s department and quickly get the other one to the foreclosing attorney who is working for the bank.   When you record the Affidavit, you’ll want to have the Notice of Default (NOD) with you.  It costs $46 to record a document in Hennepin County.  Certified copies cost $10 each.  So this will cost you a little time and money, but for the opportunity to postpone the Sheriff’s sale for 5 months so that you can try to sell your home through a short sale and possibly keep a foreclosure off your record, that’s not a bad trade off.

It would seem this new law might slow down the Sheriff sales for a while.

 

This story was published 10 days ago, but I wanted to post it on the blog.  The median sales price in the Twin Cities has continued to climb consistently each month since January this year.  January’s median sales price was just $155,000 and now in June it’s up to $173,500.   That’s up 7.5% from the median sales price in May 2009 which was $165,000.

This is consistent with what I’m seeing in the metro.  Sales transaction activity in the past year have been so dominated by properties under $150,000 that as that inventory goes away, median prices will continue to see nice bumps like the chart below.  Remember, this is the median sales price.  Given the shift away from upper bracket home sales, these numbers are much lower than normal.

Click here for the press release from the Minneapolis Area Association of Realtors.

The Minneapolis Area Association of Realtors published this week’s report and it continues to show what we’ve been seeing for the past several months.  There are fewer sellers out there and many more homes are going pending this year compared to last year at this time.  While that information is helpful on the macro level for the Twin Cities, if you’re selling in the western suburbs that scenario above is not totally accurate.

While many cities are seeing listing activity decrease, the sales activity is slowing faster than the reduction in inventory.  As a result, the supply gap is not improving.

Click here for this week’s full report.

The New York times published a story yesterday about the proliferation of loan modification firms.  Often times these firms with hide behind a law firm name but then do the work as a loan modification company.  I’ve heard that they’ll generally collent between $1,500 and $3,500 to do the work.  Some will collect it all in advance and some will collect 50% up front and 50% once the loan is modifiied.

As a consumer, you should know that you can do this work yourself directly with your mortgage company.  Also, many of these firms do not get your loan modified for a variety of reasons.  It could be that your income no longer qualifies or that your employment history isn’t what it used to be.  It could be that the home is so far upside down that even desperate bankers, investors, and government officials won’t allow the loan to be modified.

Beware of anyone who asks for this kind of money upfront on a loan modification.