MSU Extension Foreclosure Education & Counseling

(upbeat music) - [Narrator] Welcome to The Foreclosure Process in Michigan, presented by Michigan State University Extension. This video is one in a series of educational presentations about foreclosure. In this video, we will discuss the foreclosure timeline in Michigan to help you determine where you are and then what decisions you can consider. Additional videos in the series discuss determining your financial situation, the options to keep, sell, or allow the foreclosure to happen. First, let's define foreclosure and then talk about how it happens. Foreclosure is a legal process used by a lender to take a homeowner's property to satisfy a debt. Foreclosure can result from an unpaid mortgage, a second mortgage, homeowner association dues, or unpaid local property taxes. Why do these entities have the right to start foreclosure? Remember, at your closing or settlement you signed a thick stack of papers. One of those papers was the note in which you agreed to pay the debt. Another paper was the mortgage, which secures the home to the debt. This allows the mortgage company to take the home when the debt is not paid. If your mortgage is due on the first day of the month, you are technically delinquent on the second when you do not pay your payment by the first. The first notice of delinquency is mailed by the 16th of the month. You are charged a late fee. The mortgage company collection department will start making live contact with you by day 36. They ask if you know you are late making your payment, inform you about your loss mitigation options, and attempt to collect. Communicate with your lender. Depending on your situation, they may be able to work with you so that you can keep the house. If moving out is the best decision, you still have options. By day 45, the lender or servicer must assign a single point of contact to the homeowner. This person in the loss mitigation department will coordinate activities and be the focal point of information in the homeowner's file. Also, the lender or servicer sends a letter to the homeowner to notify of the delinquency and inform about loss mitigation options. After day 121, if all attempts to resolve default are unsuccessful and a hardship application is not received by the lender or servicer, the foreclosure process begins. A notice of foreclosure is recorded at the local courthouse. The Sheriff Sale date is scheduled and then published in the county newspaper for four consecutive weeks. A notice of Sheriff's Sale date, it gets posted on the property within two weeks of the first publication in the newspaper. A Sheriff's Sale is held on the published date. A deputy conducts the auction and the highest bidder wins the property, usually the lender. If the sale is adjourned or delayed, a notice is posted at the sale location and in the newspaper. After the sale, the highest bidder gets a Sheriff Deed. It lists the last date the homeowner can redeem or take back the property. This is usually six months from the Sheriff's Sale date. During the redemption period, you have three options. You can raise the necessary money to get the property back by getting a new mortgage. You must pay off the mortgage interest, late fees, court costs, attorney fees, title, appraisal fees, taxes, and insurance. Second, you can sell the property. You must sell at a price that will allow you to pay everything owed, or in the case of a short sale, get permission from your lender to sell the property for less than what you owe. Third, you can live in it for free until the end date of the redemption period, usually six months. You must pay the utilities and maintain the property as your principal residence until the end date, at which point you must leave the property. A judicial foreclosure, which is through the court system, may be required for certain borrowers rather than foreclosure by advertisement. During the redemption period, the purchaser has the right to inspect the inside and outside of the property. If the homeowner unreasonably refuses the inspections, then the purchaser can seek to evict and terminate the redemption period. The homeowner provides the purchaser a 10-day notice of their move out date or risk additional liability for damages to the property occurring during the redemption period. At the end of the redemption period, if you have not already vacated the home, the eviction process can begin. You will receive a summons to appear in court. At the hearing, a date is set for the sheriff to physically remove you from the property, if necessary. Ask yourself, where are you on the foreclosure timeline? What correspondence have you received from your mortgage company or servicer? Has the foreclosure process started? What amount do you owe if you are behind on payments? Foreclosure is expensive for your lender, up to $50,000. Once foreclosure has started, the lender hires a local attorney in Michigan and legal fees start accumulating. Even if a Sheriff's Sale is scheduled, you might be able to get it postponed to allow time for a work out package. Three foreclosure options to consider are if you can afford to keep the house or if it would be better to sell the house or let the foreclosure proceed. The other videos in this series talk about these options in more depth. We encourage you to view the ones that pertain to your situation so you can make the best possible decision. Our university-backed, unbiased, Starting Over After Foreclosure Toolkit, offers research based tools and resources to homeowners who have experienced foreclosure. Accessible and easy to read, this toolkit helps Michigan residents understand their situation both emotionally and financially and is offered online for free. For more information and additional resources, visit the MI Money Health, that is, mimoneyhealth.org website. You can also find a certified local housing counselor to talk about your situation and possible assistance. (upbeat music)