It is difficult for some homeowners to figure out the next step after receiving notice that their mortgage lenders have started foreclosure proceedings. The most immediate concern may be where to go and how long after the process starts the homeowner will be expected to leave the home. Fortunately for homeowners, they do not have to leave the home immediately, and can typically stay in the home for the duration of the foreclosure proceedings.
Generally, homeowners should be aware that the mortgage lender is about to begin foreclosure due to missed mortgage payments. Mortgage lenders do not begin foreclosure proceedings immediately after a homeowner misses a payment. The homeowner may be 120 days behind on payments before the mortgage lender starts the foreclosure.
In Michigan, the mortgage lender does not need to go to court in order to start the foreclosure proceedings and sell the home. In other states, a foreclosure can be stated only when the lender files a petition in court against the homeowner, essentially seeking to call in the mortgage loan. Lenders in Michigan can use this judicial method; however, Michigan also allows non-judicial foreclosures, where the lender can start the proceedings without having to go to court first. The lender must still comply with notice requirements and ensure that the homeowner has a chance to respond to the notice. The homeowner can negotiate an agreement with the lender to avoid foreclosure, or can opt to move out and allow the proceedings to continue.
If there is no negotiation, the lender works with the sheriff to clear the home and prepare for auction. The sale is advertised in newspapers and by other reasonable means, and then sold at auction to the highest bidder. As an estimate, from the time the lender initiates foreclosure to the time the auction is organized, it could be six months before the homeowner has to leave the home. This can be extended slightly if the homeowner and the lender negotiate an agreement in the middle of the foreclosure process that delays the foreclosure for a while.
Once the sheriff’s auction has been arranged and prospective buyers are given notice, the redemption period begins. A homeowner has one last chance to keep his or her home during this time by paying the bid price at the auction and fees. This is usually an amount equal to the mortgage balance owed. Most homeowners who are already behind on their payments may not be able to redeem their homes during this period.
Contact Us for Legal Assistance
While a foreclosure may be unavoidable for a homeowner who is in a tight financial situation, for some homeowners, the foreclosure may be a result of some wrongdoing by the mortgage lender. In this latter case, the homeowner may have legal defenses to the foreclosure action. For more information and to find out if you have a valid defense to foreclosure on your home, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible defenses and different alternatives to avoid foreclosure.
(image courtesy of Julián Gentilezza)