MICHIGAN FORECLOSURE (PART TWO)

Beware of anyone telling you, “do not contact a lawyer.” Or “save money, use us.”  In most areas, you can get a free consultation from an attorney, which should at least reveal if something is a scam.

Many people are working with the loss mitigation departments of their mortgage company, while the foreclosure process unfolds. Nevertheless, you should pay attention to what is in writing. If you have a written notice of a foreclosure sale, it cannot be overcome by anything anyone tells you on the phone. Always get it in writing. In Michigan, the sale can be adjourned for one week at a time, without any new notice going out. It is your house, you need to stay informed, so do not take the word of anyone over the phone, especially the mortgage company representatives. They may mean, and believe, what they tell you–”don’t worry, we just need approval from the home office,” or “looks good, everything you sent us should be fine.” That does not stop the legal process of foreclosure, which always must be started, and stopped, in writing. Filing bankruptcy stops a sale, it does not adjourn it.

Some mortgage companies have taken to adjourning a sale, for a week at a time, after a bankruptcy is filed, to see if the case is quickly dismissed. You will get no notice if this happens. It seems to be an open question whether this action violates the bankruptcy stay.

So, you do not file, and the sale goes through. How many days do you have to move out? No rush. In most situations, state law gives you 6 months to redeem the property. That means, paying the balance, plus accrued interest. This will include all of the costs of the foreclosure sale. Most people can only do this by selling the house. You may have equity which will be lost if you do not sell. You must close a sale before the redemption period expires. After that, you have no ownership interest in the land. You can still legally live there, until evicted, which would take at least another 30 days. But it is too late to sell or re-finance.

In the vast majority of sales, the only bid at the sale is still the first mortgage company simply bidding the balance due on the mortgage. For a second mortgage, it will be cut off by the sherriff’s deed issued at the end of the redemption period, unless it pays off the first mortgage. The government always comes first, so property taxes, water bills, and other such liens still stay with the property, and are not affected by the foreclosure sale.
In these situations, you need your own independant advice. The mortgage company is your adversary. They are trying to take your home. They are not on your side.
They are becoming more flexible, as their balance sheets fill with the homes they already have taken, but the downside to messing up this process is losing your house.
So, if they offer a deal for you to make up missed payments, get it in writing, and consult your local attorney.