A new law changes provisions relating to the fallout of the foreclosure crisis.
Sponsored by Rep. Debra Hilstrom (DFL-Brooklyn Center) and Sen. Linda Scheid (DFL-Brooklyn Park), it includes clarifying notification to persons when their property has been foreclosed.
Under the law, effective Aug. 1, 2010, a person attempting to acquire title to the mortgagor’s property following the sheriff’s sale and prior to the end of the redemption period, must provide to the mortgagor, by personal delivery three days prior to entering into an agreement to acquire title, notice of the foreclosure results, including the sale date, identity of the purchaser and the sheriff’s sale price. The information will also spell out things a mortgagor must know once their house has been auctioned, including how many months the mortgagor has to pay the winning bidder the sale price plus interest and costs to keep their home. It also spells out that the price may be less than the amount owed prior to the sheriff’s sale.
It also tries to address an emerging equity stripping scam where people observe the bidding process at a sale and see that there is a low bid and a potentially high profit to be made. They then seek to acquire title from the homeowner before the homeowner knows the redemption price. Some homeowners have turned over their title for as little as $200 for a quick-claim deed only to later find they had the ability to get the needed money for the redemption price some other way.
Other provisions include:
• clarifying that before a lender accepts a reverse mortgage application or assesses any fees, the lender must refer the borrower to an independent housing counseling agency for reverse mortgage counseling and receive proof the applicant has received counseling;
• a borrower shall not be bound for seven days after acceptance of the lender’s written commitment to make a reverse mortgage loan and cannot be required to close or proceed with the loan during that time; and
• no lender, mortgage broker or residential mortgage originator can require the purchase of an annuity, investment life insurance or long-term care insurance product to obtain a reverse mortgage loan.
The law is supported by the banking and realty industries.
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