A Minnesota homeowner took out a mortgage loan of $240,000. After making payments over several years, the remaining principal balance is $156,000 at the time the lender initiates foreclosure by advertisement under Ch. 580. To determine whether the extended 12-month redemption period applies based on the payment history, what is the minimum amount of the original principal that must have been paid, and has the borrower met that threshold?
Correct Answer
A) The threshold is $80,000 (one-third of $240,000); the borrower has paid $84,000 and meets the threshold, so the 6-month period applies
Step 1 — Calculate one-third of the original principal: $240,000 ÷ 3 = $80,000. Step 2 — Calculate amount paid: $240,000 − $156,000 = $84,000. Step 3 — Compare: $84,000 paid > $80,000 threshold. The borrower HAS paid more than one-third of the original principal. Under Minn. Stat. § 580.23, the 12-month extended redemption period applies only when LESS than one-third has been paid. Since more than one-third has been paid, the standard 6-month redemption period applies.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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