In Michigan, the foreclosure process starts with a letter giving the home owner notice that they have 14 days from the date of the letter to request a meeting for loan modification. It is important to remember that the 14 day period starts when the letter was sent, not when it was received.
If the home owner makes the request they receive a 90 day period during which a loan modification may be attempted. As a homeowner you should always request modification. Even if it looks hopeless, there may be options you are not familiar with. But, even if the modification is not successful, it is useful to have the additional 90 days to explore other options such as a short sale, bankruptcy, or other response.
If you are not sure if you received the 14 day notice, an attorney may be able to help. In addition to the letter, the notice must be posted in a newspaper. Most foreclosing law firms post these notices in the Legal News. By searching the electronic archives of the Legal News it is possible to find most notices that have been filed, although firms will sometimes use other papers and these would be missed in this search.
The mortgage modification process itself will be addressed in elsewhere on this site. Once the 90 day mortgage modification period expires, or if the time to negotiate is not requested within the 14 day period, the bank may proceed with the next step in the foreclosure process - posting and publication.
The bank must publish a notice of the foreclosure in a local newspaper, again this is usually the Legal News, once for week for four weeks. Within 15 days of the first publication they must also post the notice on the property. This is usually done by taping it to the front door, although as look as it was fastened to the property in a reasonable way it is valid, even if the notice later blows away without being seen. It is not required by the statute, but the notice will often be mailed as well.
The house is then sold at a public auction at the county courthouse by a deputy sheriff. The sale date is listed in the notice. The highest bidder, usually the foreclosing bank, receives a sheriff's deed. The borrower then has a redemption period during which they can repay the bidder and regain full title to the property. The redemption period is usually six months, but in some cases it can be a year. Also, if the home is abandoned, this period can be greatly shortened.
If the home is not redeemed and the borrower is still living in the house, or storing personal property there, the bank must then filing an eviction action. Often the bank will offer a "cash for keys" payment, typically $1,000 or more to move out of the house by a specific time and remove all personal property. Self help removal of people or property is not permitted, and may be grounds for a law suit by the borrower.
At any time after the sheriff's sale the bank has the right to sue the borrower for the difference between the amount bid at the auction and balance due on the mortgage. This is called a deficiency judgment and may be filed years after the foreclosure. To collect this judgment the auction bid must reflect a fair value for the house. So, proving that the house was worth more at the time of the auction than was bid for it can be a defense to this suit.
Throughout the process there are a variety of options the homeowner has to improve their situation. But, the options start to disappear as the process moves along. So, the earlier the home owner learns their rights, the more choices they will have.
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