But there’s more — a coming housing crisis — according to Minneapolis attorney Kevin Dunlevy, who should know. Dunlevy, of Dunlevy Law, is the co-chair of the Minnesota State Bar Association Real Property Section Legislative Committee.
It’s the pending wave of evictions and mortgage foreclosures, Dunlevy explains. State and federal eviction moratoriums have expired. RentHelp provided help to some, and evictions were held off if an application for help was pending. But RentHelp is no longer accepting applications, Dunlevy said. Federal housing assistance has not always made it through the states.
Evictions, of course, make it difficult to find another place to rent and have other negative effects. Dunlevy also warns that a rent-increase cap recently passed in St. Paul is not going to help.
“If you don’t want to encourage landlords to build apartments, that is a great way to do it,” he said, because it may prevent them from making a profit
Dunlevy also sees a “wave” of mortgage foreclosures, likely several times what it was at the beginning of the pandemic, if inability to pay or receive help persists. Lawyers have warned since the beginning of the pandemic about the wave that would come when the moratoriums were lifted.
Foreclosure law changed in Minnesota in 2020 when the Court of Appeals decided Larsen v. Wells Fargo Bank.
A foreclosure may be a judicial proceeding, or it may be a quicker procedure that is known as foreclosure by advertisement. In the latter, the creditor cannot collect a deficiency if the property is underwater, but it is a cheaper and faster way to foreclose.
Unless. Minnesota Supreme Court precedent is that lenders must strictly comply with the requirements of the nonjudicial foreclosure process or risk avoidance of a sale. In 2020, in Larsen v. Wells Fargo Bank, the Court of Appeals ruled that when the foreclosing lender published a redemption period double that to which the mortgagor was legally entitled, the nonjudicial sale was void. The court did not require prejudice to the mortgagor.
Dunlevy said the long-term result of the case law may be modification or elimination of foreclosure by advertisement. “It’s so easy to make mistakes,” Dunlevy said. That adds a lot of expense to the mortgage system and to the debtor, neither of which is beneficial to creditors. “We want the debtor to be able to redeem,” he said.