Foreclosures/Liens

Michigan's new foreclosure law includes a provision that requires mortgage holders to go through a 90-day pre-foreclosure process. Mortgage companies must send written notice to borrowers of the foreclosure process. The borrowers then have 14 days to request a loan modification meeting with the mortgage company, otherwise their home may go into foreclosure by advertisement.

Foreclosure by Advertisement

If the mortgage contains a "power of sale" clause, the lender is able to move forward with the foreclosure proceeding without obtaining court approval. A foreclosure by advertisement must follow specific guidelines, such as:

• The mortgage must be in default
• You must be notified of the default, reasons for foreclosure and amount due in writing before the mortgagee (lender) begins the foreclosure by advertisement
• You have the opportunity to request a meeting to negotiate a loan modification with the mortgage company and a housing counselor.
• The notice of foreclosure must also be posted in the newspaper for four consecutive weeks and must be posted on the property
• If another buyer purchases the property at the sheriff's sale, you still have the opportunity to redeem the property during the redemption period.

When a borrower is eligible for loan modification under Michigan's foreclosure laws, the mortgage company or bank cannot foreclosure by advertisement. They must use the judicial foreclosure process.

Judicial foreclosure

A mortgage company may decide—or be required—to use the judicial foreclosure process instead of foreclosure by advertisement. Judicial foreclosure takes much longer than foreclosure by advertisement. In this process, a court will decide whether to allow a foreclosure or dismiss the mortgage company's complaint. You will have a chance to respond to the mortgage company's allegations, but you may also have to deal with the consequences of a legal judgment.

Foreclosure and Unpaid Property

If you are facing a Tax Forfeiture sale, this means that the taxing authority is initiating a foreclosure sale due to unpaid property taxes. Filing for Chapter 13 bankruptcy can also stop this type of foreclosure. You can pay back the total unpaid taxes over the duration of the Chapter 13 (3-5 years) at a rate of 12% interest without continued penalties.

Even if the Chapter 13 is filed after the tax foreclosure, your home will still be protected. The only difference is that the repayment is at 18% interest after the sale occurs versus 12% interest if the case is filed before the sale occurs.

Redeeming Your Property After Notice of Foreclosure

There are multiple ways to redeem your property following notice of foreclosure. You may:

• Repay the arrearage balance to bring the house out of foreclosure
• File for bankruptcy under Chapter 13 prior to the Foreclosure sale occurring
• Pay the loan amount plus interest and/or sell the house after the foreclosure has occurred and before the expiration of the redemption period

Generally, the redemption period following a foreclosure sale is six months. However, there are some exceptions that can increase or decrease the redemption period.