A Minnesota homeowner purchased her home 15 years ago with a $200,000 mortgage. She has paid the balance down to $40,000 — meaning she has paid off more than two-thirds of the original loan. She now defaults, and the lender forecloses non-judicially under Chapter 580. Which redemption period applies, and why?
Correct Answer
A) 6 months, because the 12-month extended period only applies when less than one-third of the original debt has been paid
Under Minn. Stat. § 580.23, the standard 6-month redemption period applies in this case. The 12-month extended redemption period is triggered when less than one-third of the original debt has been paid at the time of foreclosure. Since this homeowner has paid off more than two-thirds of the original $200,000 loan (leaving only $40,000), she has clearly paid more than one-third, so the standard 6-month period governs.
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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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