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53 » VISIT US ONLINE @ DSNEWS.COM cial foreclosure by advertisement proceedings. at method involves serving various notices and publishing a notice of foreclosure sale for six consecutive weeks. e final point of the foreclosure sale can be postponed to later dates by publishing the postponements and serving additional notices. As mentioned, the dual tracking statute contains the vague phrase "halt the foreclosure sale" to identify what a mortgage servicer must do after a loss mitigation application has been received by the statutory deadline. at term is not contained in any other foreclosure statute and is undefined. "Halting a foreclosure sale" could mean that a mortgage servicer must stop an upcoming foreclosure sale and postpone it to a later date, if a timely application is received. However, since Minnesota is a "stop and restart state" for foreclosures, halting the foreclosure sale could also mean that the foreclosure sale must be cancelled altogether with foreclosure proceedings restarted later for a new foreclo- sure sale date, if still needed. Currently, the most common practice for mortgage servicers receiving loss mitigation ap- plications in Minnesota appears to be postpon- ing foreclosure sales rather than terminating foreclosure proceedings altogether, if they need more time to complete a loss mitigation ap- plication review and denial process. Borrowers' attorneys typically accept this course of action and routinely request foreclosure sale postpone- ments while citing the dual tracking statute, rather than demand that the foreclosures be terminated. However, recent cases indicate foreclosure proceedings must be cancelled in their entirety, if timely loss mitigation applications are sub- mitted to mortgage servicers. In Gray v. Bank of New York Mellon, a federal district court judge appeared to have misquoted the dual tracking statute in holding that non-judicial foreclosure proceedings must be stopped in their entirety once a loss mitigation application is timely submitted. In that case, the borrower submitted a loan modification application to the mortgage servicer and then received a notice of foreclosure sale two days later. Prior to the date of the foreclosure sale, the mortgage servicer denied the application and gave the borrower 30 days to appeal the decision. e borrowers filed an appeal with the mortgage servicer, and the mortgage servicer had the sale conducted during the appeal period. While the Gray court properly identified that "the statute states that servicers must 'halt' the foreclosure sale" after receiving timely loss mitigation applications, that court later identi- fied that "the statute requires servicers to 'halt' the foreclosure, which means that all proceed- ings should be suspended or stopped pending an application review." (emphasis added). e Gray court ultimately held that the borrowers' allegation that the mortgage servicer "contin- ued to pursue foreclosure" after receiving the loan modification application stated a viable claim for a violation of the dual tracking stat- ute. e broader holding of the Gray court and its analysis of the statute was surprising given that the court could have easily focused solely on the fact that the foreclosure sale was held during the alleged appeal period, in contraven- tion of the plain language of the statute. While the Gray decision appears to have re- sulted from a possible misreading of the Min- nesota dual tracking statute, that court may not be alone in interpreting the statute to require the termination of foreclosure proceedings in their entirely upon the submission of a timely loss mitigation application by a borrower. e Gray court cited Mann v. Nationstar Mortgage in its decision. However, the borrowers in Mann did not even claim the mortgage servicer was required to stop all foreclosure proceed- ings after they submitted their loss mitigation application for review. Instead, the borrower in that case claimed that the mortgage servicer violated the dual tracking statute "based on its failure to postpone the Sheriff 's Sale," despite having timely received a loss mitiga- tion application. Despite that narrow claim, the Mann court made a broad ruling, writing that "the purpose of the dual tracking statute is to prevent mortgage servicers from having it both ways: a servicer cannot 'pursue mortgage foreclosure' while also considering a borrower's timely submitted application." Regardless, the Mann court ultimately focused on whether the foreclosure sale should have been halted or conducted, whereas the Gray court also focused on whether the entire foreclosure proceedings should have been stopped instead of just the point of sale. e Minnesota Court of Appeals has also looked at this issue and appears to be con- sistent with the federal district courts. In an unpublished decision, the Minnesota Court of Appeals wrote, "When a servicer receives a loss-mitigation application, it must halt 'foreclosure proceedings' until the application has been processed." Wells Fargo Bank, N.A. v. Lansing. e court also appears to have disregarded that language of the Minnesota dual tracking statute requires the halting of the foreclosure sale, rather than the halting of the foreclosure proceedings. In addition, the Minnesota dual tracking statute does not define what a loss mitigation "application" is and whether a loss mitigation application must actually be complete to trigger the statute's protections or whether a partial application could qualify. Given the trend of the recent cases, a mortgage servicer would be wise to treat even partial applications as qualifying for dual tracking protections under this statute. None of the foregoing cases are actually binding precedent in Minnesota, since they are either federal district court level decisions or unreported. Regardless, the safest approach for servicers would be to stop foreclosure proceed- ings in their entirety during the pendency of loss mitigation applications or other activities in the current environment until binding precedent holds otherwise. Failure to take this conserva- tive route could result in an invalidated foreclo- sure and an award of attorneys' fees to borrowers under the Minnesota dual tracking statute. 2016 U.S. Dist. Lexis 66642 (D. Minn. 2016) 2015 U.S. Dist. Lexis 87772 (D. Minn. 2015) 2015 Minn. App. Unpub. Lexis 132 (Minn. Ct. App. 2015) "None of the foregoing cases are actually binding precedent in Minnesota, since they are either federal district court level decisions or unreported. Regardless, the safest approach for servicers would be to stop foreclosure proceedings in their entirety during the pendency of loss mitigation applications or other activities in the current environment until binding precedent holds otherwise."

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