City finds levee payments to property owners challenging

NEW ULM – The City of New Ulm has been working for a year to get the money rightfully owed to property owners for the new Minnesota River flood levee built over their property. The situation required expenditures by the city to avoid hypothetical claims from mortgage companies that could lack interest in the money or may not longer exist.

The levee, which cost approximately $2 million, was built in 2012 to end the problem of chronic spring flooding for residents living along the Minnesota River. The massive undertaking required the City to obtain easements or buy rights to the land the levee would cross for approximately 22 properties. Because many properties had mortgages, the City had to obtain additional rights relative to the interest of the mortgage companies. The mortgagers may have a right to the City’s payments for the easements and choose to put the money towards the mortgage balance.

The City started the process in January of 2012 and was able to quickly complete most of the work by summer. But, four properties with seven uncooperative mortgage companies among them remain unresolved.

New Ulm City Attorney Hugh Nierengarten explained the situation was simply due to lack of actual human contacts. He had anticipated a challenge due the 2008 recession creating chaos in the mortgage industry, but he did not anticipate how hard it would be. He spent hours and hours in automated phone systems with some of the bigger mortgage companies like Wells Fargo without finding a single person to talk to.

“We’re just small potatoes compared to what some of these companies do in a day. They make their money by automating as much as possible,” said Nierengarten. “I doubt some of them even have anybody that directly handles outliers like the work for our project.”

After months without a response, the City had two options: file paperwork to put the easement payments in a bank account controlled by the court until a mortgage company representative came forward to resolve it, or file a lawsuit to eliminate the hypothetical interest the mortgage company would have.

Nierengarten said the City felt the property owners deserved to get the payments and did not want to pursue the bank account option. He said the amount was too small to likely attract the interest of the companies, so the property owners would be forced to wait until they pay off their mortgages to get the funds.

As a result, the City filed a condemnation proceedings for the seven mortgage companies at the end of last year. The City was able to serve the lawsuit to representatives of four of the companies. If the companies do not contest, the lawsuits will give the City the right to dispense the easement to the property owners.

However, Nierengarten said the City was unable to find people to serve for Wells Fargo Bank, NA. and the two companies he believes no longer exist: Lehman Brothers Holding, Inc. and Mortgage One Home Equity, Inc. He said the mortgages still exist and may have been bought by other companies, but the lack of filing in Brown Court prevents them from knowing..

To satisfy legal requirements, the City was required to take out a full page public notice in the local newspaper. Wells Fargo responded, and said it will not contest the lawsuit. The other two mortgage companies will proceed with the served lawsuits unless a representative contests.

The process has cost the City nearly $9,000 to be able to give the combined total of $22,000 owed to the four properties.

The worst example is the Wells Fargo Bank, NA. mortgage company that has the levee barely into the property. The City spent $314 to file the lawsuit, the cost of an unsuccessful attempt by metro county sheriffs to serve the lawsuit and around $3,000 for the public notice ads. This cost had to incurred just so the City could pay out $215 to the property owner.

The seven mortgages lawsuits have been filed in Brown County court and could be resolved by May 20.

(Josh Moniz can be e-mailed at

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