A real estate licensee in Minnesota is explaining the foreclosure process to a first-time homebuyer. The buyer asks whether Minnesota uses a deed of trust or a mortgage, and what happens if the borrower defaults. Which of the following responses is most accurate under Minnesota law?
Correct Answer
B) Minnesota uses a mortgage; if the borrower defaults, the lender may foreclose by advertisement or through a judicial process
Minnesota is a mortgage state, not a deed-of-trust state. When a borrower defaults, the lender has two options under Minnesota law: (1) non-judicial foreclosure by advertisement under Minn. Stat. Ch. 580, which does not require a court proceeding but requires a power-of-sale clause in the mortgage and publication of notice; or (2) judicial foreclosure under Minn. Stat. Ch. 581, which requires a court judgment. Both methods are valid in Minnesota.
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Related Topics & Key Terms
Key Terms:
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A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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.
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