At FLPC, we are beginning to see mortgage defaults and foreclosures. As more individuals face mortgage default, we thought it would be helpful to share how it all works so our potential clients and neighbors can AVOID SCAMS. If you are in default on your mortgage, speak with an attorney who has knowledge of the foreclosure process! After the last recession there was an explosion of companies making fake promises and scamming desperate homeowners out of thousands of dollars. It is so important that you speak with an experienced attorney before you fork over thousands of dollars to anyone. We offer free consultations to anyone in Michigan who is facing mortgage foreclosure. Schedule your appointment here: Schedule Your Consultation Here!
MICHIGAN FORECLOSURE PROCESS
Step 1: Notice of Default
A homeowner who is behind on payments will receive a notice of default stating the mortgage arrearage. The Notice of Default will include the following information:
- Give due date to bring your loan current. If you do not bring your loan current by the due date, your entire mortgage balance will be accelerated and become due.
- Allow thirty (30) days to dispute the default in writing. After 30 days, the foreclosure process begins.
Step 2: Foreclosure Process
Most mortgage servicers will not until you are at least three (3) months behind on mortgage payments.
- Foreclosure by advertisement. Most mortgages in Michigan are foreclosed by advertisement.
- Notice in newspaper for four (4) weeks. A “foreclosure by advertisement” means the lender does not take you to court. Instead, it publishes a notice in the newspaper stating its intention to conduct a foreclosure sale by auction at the courthouse. This notice must be published for four (4) weeks in a row in the newspaper.
- Notice posted on house. The mortgage servicer will also post this notice with foreclosure information on your home. The notice on your house only needs to be posted one (1) time.
- Notice does not need to be seen by the homeowner. This means there is no requirement that you, as the homeowner, see any of these notices. The notices are usually published in a legal newspaper that few non-lawyers read. This can be good if you do not want your neighbors or colleagues to know about your business, but it also means you are unlikely to learn of the foreclosure from the notice. Most people learn of the sale date by the posting of the sale notice on their home. The mortgage company hires someone to tape the sale notice to your door (or other location) where you are likely to see it. The person that posts the notice will take a picture to show it was done. These notices do sometimes fall off or blow away and if that happens your failure to see it will not make the sale invalid. Therefore, it is important to take steps the moment you receive the notice that your loan is being accelerated.
Step 3: Sheriff’s Sale
The foreclosure proceeding is also called a “sheriff’s sale.” Here is what happens on that day:
- The sheriff’s deputy will read out the list of properties facing foreclosure at the courthouse. The sheriff’s deputy will come back about an hour later to accept bids on the foreclosed houses.
- Typically, the only parties who bid on the foreclosed houses are the mortgage companies.
- At the conclusion of the sale, the property belongs to the successful bidder, and you have lost ownership of your house. The mortgage company now owns your house.
- Redemption. After you have lost ownership of your house, you will have six (6) months to redeem the property – this means you will have to pay the entire sale amount (usually the outstanding mortgage balance) in a lump sum to the mortgage company to buy your home back.
- Eviction. At the end of the six-month redemption period, you will be evicted by the mortgage company (unless you have redeemed your home).
Key Facts You Need to Know
- When you fall behind 3 months in payments most mortgage companies will start the process to foreclose on your house.
- Once you receive the letter stating that they are accelerating your loan balance and you have a right to contest the default you have 30 days before they start the foreclosure process. At this point you should try to apply for a loan modification and/or contact a bankruptcy attorney or a housing counselor to discuss your options.
- After the 30 days ends the mortgage company will begin the publication and posting process and even if you never see the publications in the newspaper or the notice posted on your house the sale can be held and you will lose your house. If you have already had the sale notice posted on your house, you need to act quickly. You only have weeks or days to avoid the sale.
- Once the foreclosure sale occurs there is very little anyone can do to help you stay in your house. Any promises by companies or individuals stating otherwise are usually a scam. Legally, title transfers at the foreclosure sale and the reasons a court will hold that sale invalid are very limited.
It is so important that you speak with an experienced attorney before you fork over thousands of dollars to anyone. We offer free consultations to anyone in Michigan who is facing mortgage foreclosure. Schedule your appointment here: Schedule Your Consultation Here!