Foreclosure Information
Foreclosure is a legal process by which a bank, mortgage company or other creditor takes a homeowner’s property in order to satisfy a debt. The foreclosure is the result of non-payment of the mortgage (including second mortgages and home equity loans); however, people also lose their homes due to unpaid property. As a result of the foreclosure (at the end of the redemption period), the homeowner loses the rights he or she had to the property. © 2006 Michigan State Housing Development Authority
Foreclosure processes are different in every state. If you are worried about making your mortgage payments, then you should learn about your state's foreclosure laws and processes. Differences among states range from the notices that must be posted or mailed, redemption periods, and the scheduling and notices issued regarding the auctioning of the property. However, a general understanding of what to expect can be found on the HUD Foreclosure Timeline page.
In general, mortgage companies start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees are charged after 10-15 days, however most mortgage companies recognize that homeowners may be facing short-term financial hardships. It is extremely important you stay in contact with your lender within the first month after missing a payment.
After 30 days, the borrower is in default, and the foreclosure processes begin to accelerate. If you do not call the bank and ignore the calls of your lender, then the foreclosure process will begin much earlier. At any time during the process, talk to your lender or a housing counselor about the different alternatives and solutions that may exist.
Michigan Foreclosure Process Overview
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust,
Mortgage
- Timeline: Typically 60 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Varies
In Michigan, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
Three types of foreclosures may be initiated at this time: judicial, power of sale, and strict foreclosure. All types of foreclosure require public notices to be issued and all parties to be notified regarding the proceedings. Once properties are sold through an auction, families have a small amount of time to find a new place to live and move out before the sheriff issues an eviction.
Judicial Foreclosure All states allow this type of foreclosure, and some require it. The lender files suit with the judicial system, and the borrower will receive a note in the mail demanding payment. The borrower then has only 30 days to respond with a payment in order to avoid foreclosure. If a payment is not made after a certain time period, the mortgaged property then is sold through an auction to the highest bidder, carried out by a local court or sheriff's office.
Power of Sale This type of foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause. After a homeowner has defaulted on mortgage payments, the lender sends out notices demanding payments. Once an established waiting period has passed, the mortgage company rather than local courts or sheriff's office carries out a public auction. Non-judicial foreclosure auctions are often more expedient, though they may be subject to judicial review to ensure the legality of the proceedings.
Strict Foreclosure A small number of states allow this type of foreclosure. In strict foreclosure proceedings, the lender files a lawsuit on homeowner that has defaulted. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used
when a power of sale clause exists in a mortgage
or deed of trust. A "power of sale"
clause is the clause in a deed of trust or mortgage,
in which the borrower pre-authorizes the sale
of property to pay off the balance on a loan
in the event of the their default. In deeds
of trust or mortgages where a power of sale
exists, the power given to the lender to sell
the property may be executed by the lender or
their representative, typically referred to
as the trustee. Regulations for this type of
foreclosure process are outlined below in the
"Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a
power of sale clause and specifies the time,
place and terms of sale, then the specified
procedure must be followed. Otherwise, the non-judicial
power of sale foreclosure is carried out as
follows:
A notice of sale must be published once a week
for four (4) in a newspaper of general circulation
in the county where the property is located.
The notice must also be posted on the property
at least fifteen (15) days after the first notice
of sale is published.
The notice must contain the borrower and lenders
name, a description of the property, the terms
of the sale and the time, place and date of
the sale.
The sale must be made at public auction to the
highest bidder. The trustee or the sheriff of
the county, if different, may conduct the sale
between the hours of 9:00 am and 4:00 pm on
the date specified in the notice of sale.
The sale may be postponed by posting a notice
at the time and place where the sale was to
originally be held. If the postponement is for
more than one week, it must also be published
in the manner as the original notice of sale
was given.
This information provided by the US government on HUD.gov - content current as of September 30, 2008.
Frequently Asked Questions
Q: If faced with foreclosure, what are my
options?
A: Talk with your lender immediately.
The lender may be able to arrange a repayment
plan or the temporary reduction or suspension
of your payment, particularly if your income
has dropped substantially or expenses have shot
up beyond your control.
You also may be able to refinance the debt or
extend the term of your mortgage loan. In almost
every case, you will likely be able to work
out some kind of deal that will avert foreclosure.
If you have mortgage insurance, the insurer
may also be interested in helping you. The company
can temporarily pay the mortgage until you get
back on your feet and are able to repay their
"loan." If your money problems are
long term, the lender may suggest that you sell
the property, which will allow you to avoid
foreclosure and protect your credit record.
As a last resort, you could consider a deed-in-lieu
of foreclosure. This is where you voluntarily
"give back" your property to the lender.
While this will not save your house, it is not
as damaging to your credit rating as a foreclosure.
Q: When do foreclosure proceedings begin?
A: Usually after the borrower has missed
three consecutive mortgage payments. The lender
will record a notice of default against the
property. And unless the debt is satisfied,
the lender will foreclose on the mortgage and
proceed to set up a trustee sale, where the
property is sold to the highest bidder.
Q: Will I be able to buy again after losing
a home to foreclosure?
A: It can happen. But a lot will depend
on your circumstances and the mortgage interest
rate you are willing to pay. Generally, most
lenders will consider your request for a home
loan two to four years after your foreclosure.
Predatory lenders will issue a home mortgage
in less time. But beware - they routinely charge
high mortgage interest rates, fees, and penalties
for this privilege. A quality lender will expect
you to show that you have cleaned up your credit.
Providing a reasonable explanation about the
circumstances that led to the foreclosure -
such as exorbitant medical expenses - is also
helpful.
Q: How can I protect my home from creditors?
A: Check with your state. It may provide
special protection through the filing of a homestead
exemption, which exempts some or all of the
value of your equity in the homestead - or home
that you live in and the land on which it sits
- from claims of unsecured creditors. Whether
to file a homestead exemption will depend on
your situation. Contact your county recorder's
office for details.
Are you at risk?
Many times homeowners do not know they are at
risk for going into delinquency and/or foreclosure.
Take this brief questionnaire to asses your
risk.
Can you answer "Yes" to any of these?
Yes |
No |
|
| Are you currently shopping for a mortgage and are interested in learning more about loan products that are available? | ||
| Do you pay your property taxes separately from your mortgage payment? | ||
| Does your mortgage have a prepayment penalty? | ||
| Do you have an adjustable rate mortgage (ARM)? | ||
| Has there been a change in household income? | ||
| Has there been a recent increase in the amount of debt you have? |
This information provided by the US government on HUD.gov - content current as of September 30, 2008.
DISCLAIMER: This information is intended for general informational purposes only and are displayed solely as a service to consumers. No information on this page or web site is to be viewed as legal advice or as an official description of judicial process. Consumers are advised to seek professional legal counsel in any default proceeding.Michigan Foreclosure Source is powered by Century 21 Today. Our agents understand the short sale process and Foreclosures. Please contact us for all of your real estate needs. We've been serving Southeast Michigan families since 1977 and it will be our pleasure to serve you and your family.