A Minnesota homeowner took out a mortgage loan of $180,000 to purchase a home in Minneapolis. The homeowner defaults after paying down the principal to $130,000. The lender forecloses by advertisement under Ch. 580, and the property sells at the foreclosure sale for $155,000. The homeowner wants to redeem the property. Under Minnesota law, what is the minimum amount the homeowner must pay to redeem the property, assuming the statute allows redemption at the foreclosure sale price plus 5% annual interest for 6 months with no additional costs?
Correct Answer
D) $158,875 (the foreclosure sale price plus 5% annual interest for 6 months)
Step 1 — Identify the redemption base: Under Minnesota law, the mortgagor redeems by paying the foreclosure sale price, not the remaining mortgage balance. Redemption base = $155,000. Step 2 — Calculate 6-month interest at 5% annual rate: $155,000 × 5% = $7,750 per year; $7,750 ÷ 2 = $3,875 for 6 months. Step 3 — Total redemption amount: $155,000 + $3,875 = $158,875. The homeowner must pay $158,875 to redeem the property within the 6-month redemption period.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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