Mortgage Foreclosure in Michigan
If your home loan has defaulted, and you are facing foreclosure, you will likely get many solicitations in the mail from various sources offering to help. Be wary of people who make promises to help or rescue offers that sound too good to be true. You need an expert to assist you through this difficult process. Zochowski Law has extensive experience representing homeowners in every stage of the mortgage foreclosure process.
The following is a brief explanation of the steps involved in a typical Michigan home mortgage foreclosure. Please contact our office for more detailed advice about your specific situation.
With certain exceptions, for most homeowners the foreclosure process begins with a default on their loan. Usually this is a missed payment. A missed payment can start a snowball effect of charges that attach to the outstanding balance due for you loan.
Foreclosure by Publication
Michigan is a foreclosure by publication state. That means that a bank that holds a mortgage against your home does not have to sue you in court in order to take your home from you. It does not have to serve you with notice of a lawsuit or take the matter before a judge to review.
To start the foreclosure process, your mortgage company merely has to publish a legal notice in your local legal newspaper. As you can imagine, it is quite common for people to not even realize their home has gone into foreclosure until it is too late.
A catch up payment that pays all of the outstanding fees and missed payments is called a reinstatement of your mortgage. This payment can stop a foreclosure if it is paid before a set deadline. Homeowners should be mindful that mortgage companies may reject partial payments that you offer or mail to them and still foreclose on a loan if all penalties, interest and attorney fees are not paid in full.
If you default on your loan and are not able to pay to reinstate it by the deadline set by the mortgage company’s attorneys, your home will go into foreclosure. A public auction, called a sheriff’s sale, is held at your local county building. After the sheriff’s sale, the winning bidder (usually a bank) obtains a sheriff’s deed to your property. A properly timed bankruptcy can stop a sheriff’s sale.
For most home loans in Michigan, you will have a 6-month redemption period after the sheriff’s sale during which you may continue to live in your home. Although technically you have the legal right to redeem your loan and stay in your home by paying off the total balance owed in a lump sum, very few people have the means to do this.
Once the redemption period expires, if you have not redeemed your mortgage, ownership of the property will fully pass to the winning bidder from the sheriff’s sale (usually a bank). The bank will then evict you through a very quick legal process in your local district court’s landlord-tenant division. Having an attorney involved at this stage can get you additional time in the property and allow you more control over the process of turning over possession of the property.
Most Michigan foreclosures result in sheriff’s sale prices that are substantially less than what is owed on the loan. If a homeowner has a second mortgage or home equity loan, it is quite common that the second lender will receive nothing from the sheriff’s sale. Those remaining balances owed after a foreclosure are called a deficiency.
In 2009, the median sheriff’s sale price for a home in Detroit, Michigan was $8,000. For that value of sale, it is actually possible for a homeowner to still owe more to their bank after losing their home than what they owed for the loan balance at the time of the default. This is because penalties, interest and the mortgage company’s attorney fees may exceed the amount that was paid at the sheriff’s sale.
If you owe a deficiency balance on your loan after a mortgage foreclosure, Michigan law permits your bank to sue you to collect that money. A bankruptcy is one means to ensure that you will not be sued for a mortgage deficiency.
You need an expert to assist you to protect your income and assets after a foreclosure. Our office can also provide the legal advice and guidance you will need to rebuild your credit after a foreclosure.