Minnesota, following in the footsteps of California, is the second state to pass a Homeowner Bill of Rights designed to protect struggling homeowners who are facing foreclosure.
The legislation provides basic protections against some of the worst practices in the mortgage servicing industry. (Learn about abuses in the mortgage servicing industry.)
Protections in the Homeowner Bill of Rights
The Minnesota Homeowner Bill of Rights requires loan servicers to do all of the following things.
- Notify homeowners of all available loss mitigation options.
- Assist homeowners in submitting loss mitigation documentation.
- Offer a loan modification or another loss mitigation option to eligible borrowers.
- Stop dual tracking (where the servicer continues to foreclose while simultaneously considering the homeowner’s application for a loan modification or other loss mitigation option).
If the loan servicer fails to comply with these requirements, the homeowner can take the servicer to court to block or reverse the foreclosure.
Properties Covered by the Homeowner Bill of Rights
The protections apply to first-lien residential mortgage loans for properties that are:
- owner-occupied as the owner’s principal residence and
- have no more than four units.
Most Protections Go Into Effect August 1, 2013
The protections are effective as of August 1, 2013, except for the dual-tracking prohibition, which goes into effect on October 31, 2013.
Your State (or City) Could be Next
More and more states are embracing the idea of a Homeowner Bill of Rights to protect homeowners, reduce foreclosures, and stabilize local housing markets. Nevada recently passed its own Homeowner Bill of Rights and there are several other states considering such legislation. Some cities are even enacting a Homeowner Bill of Rights. (Get details in Nolo’s article Special Foreclosure Rules in Lynn, Lawrence, and Springfield, Massachusetts.)
To learn more about the new foreclosure protections in the Minnesota Homeowner Bill of Rights, see Nolo’s article Minnesota Homeowner Bill of Rights.
by Guest Blogger & Nolo Contributing Editor Amy Loftsgordon