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582.043 LOSS MITIGATION; MORTGAGE FORECLOSURE DUAL TRACKING.

Subdivision 1. Definitions.

(a) For purposes of this area, the terms defined in this neighborhood have actually the significances provided.

(b) "Foreclosure sale date" suggests either:

( 1) the date of the foreclosure sale contained in the notice that has actually been either served or released as needed under area 580.03, or 550.18 and 550.19; or

( 2) the date to which the foreclosure sale is held off by the customer under area 580.07, subdivision 2,

whichever is later on.

(c) "Loss mitigation alternative" indicates a momentary or irreversible loan adjustment, a forbearance agreement, a payment agreement, a primary decrease, capitalizing defaults, or any other relief planned to allow a mortgagor to keep ownership of the residential or commercial property.

(d) "Mortgagor" indicates a person who is liable on the promissory note protected by the mortgage, other than that the mortgagor does not include an individual who has surrendered the mortgaged residential or commercial property, as evidenced by either a letter or other composed notification confirming the surrender or by delivery of the secrets to the residential or commercial property to the servicer or authorized representative.

(e) "Servicer" means a residential mortgage servicer as defined in section 58.02, neighborhood 20.

(f) "Small servicer" indicates a servicer that is either:

( 1) a small servicer, as defined in Code of Federal Regulations, title 12, area 1026.41, paragraph (e), provision (4 );

( 2) a Housing Finance Agency, as specified in Code of Federal Regulations, title 24, area 266.5; or

( 3) a servicer that has actually performed 125 or less foreclosure sales during the preceding 12 months.

Subd. 2. Applicability.

This section uses only to very first lien mortgages based on foreclosure under chapter 580 or 581 that are protected by owner-occupied domestic real residential or commercial property containing no greater than 4 dwelling units and where the subject mortgage does not secure a loan for organization, commercial, or farming purposes. For purposes of this neighborhood, "owner-occupied" implies that the residential or commercial property is the principal residence of the owner.

Nothing in this section imposes a task on a servicer to provide any mortgagor with any specific loan modification alternative.

Subd. 3. Compliance required.

A servicer will not carry out a foreclosure sale unless the servicer has actually abided by neighborhoods 5, 6, and 7, if appropriate.

Subd. 4. Small servicer requirements.

A little servicer is exempt to this section, except that a little servicer shall not refer a mortgage loan to an attorney for foreclosure, record the notification of pendency or lis pendens, or carry out a foreclosure sale if a mortgagor is carrying out pursuant to the regards to a loan modification or other loss mitigation agreement.

Subd. 5. Loss mitigation.

A servicer should:

( 1) alert a mortgagor in writing of offered loss mitigation choices provided by the servicer that apply to the mortgagor's loan before referring the mortgage loan to an attorney for foreclosure;

( 2) after receiving a request for a loan modification or other loss mitigation option, exercise affordable diligence in acquiring documents and information from the mortgagor to finish a loss mitigation application, facilitate the submission and evaluation of loss mitigation applications, and give the mortgagor a reasonable quantity of time to supply the required files;

( 3) upon the timely invoice of a loss mitigation application, examine the mortgagor for all available loss mitigation alternatives prior to referring a mortgage loan to an attorney for foreclosure;

( 4) after review of the loss mitigation application, prompt offer the mortgagor a loan adjustment if the mortgagor is eligible or, if not, timely offer the mortgagor any other loss mitigation alternative for which the mortgagor is eligible; and

( 5) abide by any appropriate appeal duration and procedures suitable to the specific loss mitigation alternative.

Subd. 6. Dual tracking.

(a) If the servicer has gotten a loss mitigation application and the subject mortgage loan has actually not currently been referred to an attorney for foreclosure, a servicer will not refer the subject mortgage loan to a lawyer for foreclosure while the mortgagor's application is pending, unless:

( 1) the servicer figures out that the mortgagor is not eligible for any loss mitigation choice, the servicer notifies the mortgagor of the determination in writing, and the suitable appeal duration has actually ended without an appeal or the appeal has actually been appropriately rejected;

( 3) the mortgagor decreases the loss mitigation deal in writing.

(b) If the servicer gets a loss mitigation application after the subject mortgage loan has actually been described an attorney for foreclosure, however before a foreclosure sale has actually been set up, a servicer will stagnate for an order of foreclosure, seek a foreclosure judgment, or perform a foreclosure sale unless:

(c) If the servicer receives a loss mitigation application after the foreclosure sale has been set up, but before midnight of the seventh service day prior to the foreclosure sale date, the servicer needs to stop the foreclosure sale and examine the application. If required to halt the foreclosure sale and examine the application, the servicer needs to not move for an order of foreclosure, look for a foreclosure judgment, or carry out a foreclosure sale unless:

( 1) the servicer identifies that the mortgagor is not qualified for a loss mitigation alternative, the servicer informs the mortgagor of this determination in writing, and the relevant appeal duration has ended without an appeal or the appeal has been correctly denied;

( 2) where a written deal is made and a written approval is needed, the mortgagor stops working to accept the loss mitigation deal within the time frame specified in the offer or within 14 days after the date of the offer, whichever is longer; or

( 3) the mortgagor decreases a loss mitigation deal in writing.

(d) A servicer will stagnate for an order of foreclosure or perform a foreclosure sale under any of the following scenarios:

( 1) the mortgagor remains in compliance with the regards to a trial or permanent loan modification, or other loss mitigation alternative; or

( 2) a short sale has actually been authorized by all essential parties and proof of funds or financing has actually been offered to the servicer.

Subd. 7. Relief.

(a) A mortgagor has a cause of action, based upon an infraction of this section, to tell or set aside a sale. A mortgagor who dominates in an action to reserve or tell a sale, or who effectively protects a foreclosure by action based on an offense of this area, is entitled to reasonable lawyer costs and costs.

(b) A lis pendens must be recorded prior to the expiration of the mortgagor's suitable redemption duration under section 580.23 or 582.032 for an action taken under paragraph (a). The failure to tape-record the lis pendens creates a conclusive presumption that the servicer has adhered to this section.