MN SF1276

Requires mortgage servicers to notify mortgagors of available loss mitigation options before referring loans to attorneys for foreclosure and to evaluate applications timely and offer eligible mortgagors loan modifications or other relief options.

Prohibits servicers from pursuing foreclosure while loss mitigation applications are pending, except when mortgagor is determined ineligible, declines the offer in writing, or fails to accept within specified timeframes (14 days minimum).

Requires servicers to halt foreclosure sales scheduled within seven business days if a loss mitigation application is received, and mandates servicers not proceed if mortgagor is complying with a loan modification or if a short sale is approved with proof of funds provided.

Establishes that small servicers are exempt from loss mitigation requirements but cannot refer loans to attorneys or conduct foreclosure sales if mortgagors are performing under loan modification or loss mitigation agreements.

Adds loss mitigation compliance as a requisite for foreclosure and creates a cause of action allowing mortgagors to enjoin or set aside sales based on servicer violations, with prevailing mortgagors entitled to reasonable attorney fees and costs; effective August 1, 2013.