For homeowners facing foreclosure, understanding the process of foreclosure and the options they have to stop missed payments from leading to foreclosure is important. If a homeowner can get together with his or her mortgage lender early on, and the mortgage lender is willing to work with the homeowner, the lender may offer the homeowner mortgage deferment. This can buy the homeowner some much needed time to get his or her finances together, especially after an emergency.

A deferment for mortgage purposes is a period of time during which the homeowner does not make payments on the mortgage loan. A deferment is similar to mortgage forbearance, although some forbearance terms include lowering the payment due instead of suspending it entirely. During the period that payments are suspended, the homeowner may be able to recover financially and continue making payments when the regular payments resume.

Deferment is generally not to be used by homeowners who are dealing with long term financial shortfalls. This is because deferment only temporarily stops payments; the missed payments are still owed by the homeowner. Deferment does not forgive any part of the homeowner’s financial obligations, it just postpones them. When the deferment period ends, the homeowner may be required to make a lump sum payment to cover the missed payments, or the past payments may be added onto the future mortgage payments. The homeowner may work out a deal with the mortgage lender to get a break on the interest during that time, and have the interest added onto the principal.

Whether a homeowner qualifies for deferment depends on the mortgage lender. The lender may limit deferment to homeowners who are in their primary residences and not paying a mortgage on a second home. In addition, the homeowner may be subject to restrictions on selling the home or moving out during the deferment period. This does not mean that the homeowner cannot use this time to make plans to move out or sell the home after the deferment period if his or her financial outlook does not improve.

Homeowners should also be aware that they can seek deferment for property taxes. Missed property tax payments can lead to foreclosure, and if a homeowner is experiencing a temporary difficulty, he or she can apply for property tax deferment. Homeowners have to meet eligibility requirements that include income limits. Generally, if a homeowner who is granted a deferment makes payments according to the deferment timeline, the deferment does not come with additional costs. However, if the homeowner misses payments, there may be additional costs for interest and fees.  

When negotiating with a mortgage lender for deferment and other loss mitigation programs, it is best to work with an experienced attorney in order to ensure that you are agreeing to the best terms for you and not setting yourself up for future problems.

Contact an Experienced Attorney

If you are facing foreclosure and want to find out more information on deferment, forbearance, and 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 foreclosure defenses and different alternatives to avoid foreclosure.

(image courtesy of Age Barros)

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)

When a homeowner is facing foreclosure because of financial problems, and also has other significant debts that are unmanageable, bankruptcy may be the best way forward. However, when a mortgage debt is discharged in a

Reaffirmation of a debt in Chapter 7 bankruptcy means that the person filing for bankruptcy excludes the debt from the debts discharged through the bankruptcy process. The creditor and the debtor agree to waive the debt’s discharge in bankruptcy.

Generally, when a person files for Chapter 7 bankruptcy, there is a period of time known as a stay period, during which creditors are required to stop all collection attempts. If a foreclosure has been started, it has to be put on hold during this stay period. However, the foreclosure action will not be held off indefinitely, and the homeowner has to either reaffirm the mortgage loan or lose the home. In reaffirming the mortgage loan, the homeowner agrees to make on-time payments on the loan and abide by whatever other terms are included in the reaffirmation agreement.

Reaffirmation has to be done before the bankruptcy is discharged, and the mortgage lender has to agree to the reaffirmation. Some lenders may not agree to the reaffirmation because the homeowner has been late on payments or missed payments in the past. If the mortgage lender agrees to the reaffirmation, it could require that the homeowner first make up any missed payments.

Even with a reaffirmation agreement, after the bankruptcy, if the homeowner misses payments on the mortgage or otherwise breaches the reaffirmation agreement, the lender can begin foreclosure proceedings again. If this happens, the homeowner can remain on the hook for any balance after the home is sold. This would be a major disadvantage over dismissing the entire mortgage loan in the bankruptcy.

Before deciding whether to reaffirm a mortgage loan, it is important to discuss this issue with an experienced attorney. While the decision to keep your home after a bankruptcy can be an emotional one, it needs to be approached rationally. If reaffirming the debt will only lead to more missed payments and eventually a foreclosure proceeding, it may not be in the homeowner’s best interest to reaffirm the loan.

It is important to also have an attorney review any reaffirmation agreement to ensure that the homeowner’s interests are well represented, and that the terms are not too difficult for the homeowner to keep up with.

Contact an Experienced Attorney

If you are experiencing financial troubles and foreclosure seems like a possibility, you need to speak with an experienced attorney from a firm that handles both foreclosures and bankruptcy. Our experienced attorneys can discuss the legal issues that will arise with either a foreclosure or a bankruptcy and how they will affect you. Call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan.

(image courtesy of Eric Parks)

In Michigan, there are two ways lenders can foreclose:

1) Judicial Foreclosure: Where the lender must take the borrower to court, and;

2) Foreclosure by Advertisement: Where the lender may foreclose by scheduling a Sheriff’s sale and advertising that sale in a local paper.

Michigan is considered a “Foreclosure by Advertisement” state because nearly all Michigan foreclosures are by advertisement. However, both types of foreclosure are permitted. The Michigan State Housing Development Authority offers an in-depth explanation of the foreclosure timeline and process; click here for more information.

For 50 years, Michigan foreclosure law has included a six-month redemption period for homeowners whose homes have sold at the Sheriff’s Sale. This period is designed to provide a reasonable amount of time for homeowners to redeem the home, refinance it, sell it on a short sale or find a new place to live. If a homeowner abandons the property before the six months is up, the lender can shorten the redemption period to 30 days.

Beginning in June 2014, changes to the redemption period in Michigan went into effect, including that the purchaser of a home at Sheriff Sale has the right to inspect the interior and exterior of the house and all other buildings on the property. Exterior inspections can be done as often as the purchaser wants, without any notice. An interior inspection requires a letter be sent identifying the purchaser, providing contact information, along with other information including their right to inspect. A second letter is required 72 hours before the interior inspection, setting a date and time. “Unreasonable” refusal of any inspection may lead to eviction proceedings.

Tenants living in foreclosed properties are particularly affected by the impact of foreclosure. The Protecting Tenants in Foreclosure Act is a federal law that makes clear what happens when the foreclosed landlord’s redemption period is over and the bank or mortgage company takes over as owner of the house or apartment building. The law provides for tenants with an existing lease as follows: both parties (bank and tenant) must honor and continue with the terms of the current lease; all tenants are guaranteed at least 90 days notice before they can be evicted, unless the bank or mortgage company intend to use the property; and tenants must pay the bank their monthly rent and the bank must provide all maintenance and repairs to the house or apartment.

If you are a homeowner facing foreclosure, or a tenant whose landlord failed to make their mortgage payments, the attorneys at Resnick Law can help. Contact us online or call (248) 642-5400 to schedule a free consultation.