Minnesota Foreclosures

[MNintrouble]

Hello

I don't know if I am posting this in the right section or not, but here's my situation. I own a rental property in Minnesota that I purchased on a contruction loan individually then had to acording to the terms of the contruction loan re-finance it at which time I qualified for the loan individually and my wife just signed the mortgage, not the note. There was no cash out - it was just a straight re-fi. At the time there was a 10% equity position which put us into a 80/10 mortgage. We have been renting the house with a rent-to-own option but the renters want out. We are current with the payments, but just found out that the houses are selling for $100K less than what we paid. We don't want to short sale it because we can't afford the 1099 on that kind of money. So we are looking into foreclosure as a last resort. Please help. What kind of tax troubles are we facing? Can they come after my 401K assets or anything like that? Can they come after my wife or any of her assets since she didn't qualify for the mortgage? Any help you can give would be greatly appreciated we are desperate. Thank you

[MNintrouble]

I forgot to say that I want to avoid bankruptcy in this situation if at all possible - is this possible?

[Moe]

Welcome to Loan Safe and thanks for sharing your story. This section i just fine. So, you have decided to walk from your home. This may have implication's legally and financially and it is always best to speak with an attorney about this. I will see if I can help you a bit here and get you going in the right direction.

Judicial Foreclosure:

Minnesota Foreclosure Laws - Information and laws for purchasing foreclosures in Minnesota
In order to obtain a deficiency judgment, the mortgage must be foreclosed by judicial action. Judicial foreclosure can also be used to cure title defects or if in a Minnesota Foreclosure by Advertisement the occupants of the property are avoiding service.

This involves the filing and service of a summons and complaint and obtaining a judgment. After judgment has been entered, the matter is scheduled for a judgment and decree sale with the Sheriff. The Notice of Sheriff’s Sale under judgment and decree must be published and posted for six weeks.

The difference between the amount of the debt and the bid will establish the deficiency. After completion of the sale, the court must confirm the sale results. Redemption will run from the date of confirmation. Collection of the deficiency can be commenced after confirmation of the sale.

Lenders may pursue a deficiency judgment, but it is limited to the amount of the fair marker value of the property and the unpaid balance of the original loan. Borrowers have up to one (1) year to redeem the property by paying the past due amount on the loan.

As far as your wife, she is not a borrower on the mortgage, so she will not be liable for any mortgage related issues. If she is on title, then she will be obligated to the property taxes etc.

You can find an attorney at National Association of Consumer Advocates – Consumer Protection Advocates and Attorneys . Best of luck and stay strong!!!