To figure out what can be done for a foreclosure, the most important part is how understanding the foreclosure process in MI can help. This can help you navigate your own home foreclosure.
What is foreclosure anyway?
Foreclosure is a legal process used by lenders to reclaim the property that is securing one of their loans, and this happens after the owner stops making the payments.
It is a tough time to go through a Foreclosure. But it is not the end of the world and fortunately there are solutions out there.
This article should teach how foreclosure in MI works… And when you know that, it should arm you with what you need to navigate it well and come out on the other side as good as you can be.
The Basic Stages of A Foreclosure
The foreclosure process comes in a few important stages.
And different states have different processes when it comes to how foreclosure works.
The states can either be a judicial sale state or power of sale state to foreclose on a property.
Connect with us by calling (586) 991-3363 or by visiting our contact page to have us walk you through the process that is specific to our local foreclosure process here in Detroit MI.
In both scenarios, usually foreclosure will not go to court until the owner has missed approximately 3-6 months of payments. Often (but this is not always the case), a lender will mail out more than a few notices that you are in arrears – which means overdue or behind in payment.
Under Judicial Foreclosure:
- The mortgage lender has to file suit by using the court system.
- The court will send out a letter demanding payment.
- As long as the loan is valid, you will have around 30 days for your payment to be brought to court to avoid the foreclosure event (and it’s possible that this can be extended).
- If the payment isn’t made within this payment period, there will be a judgment entered and your lender can request the sale of the property – which often occurs through an auction.
- And then when the property is sold, the an eviction notice will be sent by the sheriff which will force you to vacate the property immediately.
Under Power of Sale (or Nonjudicial Foreclosure):
- Papers will be served directly from the mortgage lender which will specify a demand of payment, and there is no need for the courts – however the process may still be subject to a review from a judge.
- There will be a waiting period and after this has gone, there will be now a deed of trust that will be produced and this will transfer control of the property is to a trustee.
- And after this occurs, the trustee can sell the property at the lender’s behalf at a public auction (there must be notice given).
Those parties that have an interest in the property must be notified when dealing with either of these types of foreclosure.
For instance, if there are contractors or banks that have liens against a foreclosed property, they are are entitled to collect from what comes out of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgement laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Amaze Properties LLC to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Detroit, we can help you.
We buy houses in Detroit MI like yours from people who need to sell fast.
Give us a call anytime (586) 991-3363 or
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Other Foreclosure Resources For Detroit MI HomeOwners: