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Understanding the Foreclosure Process in MI

What is foreclosure anyway?

The legal process of foreclosure is what lenders utilize to reclaim the assets used as collateral for loans, usually when the borrower stops paying payments.

Closing is not enjoyable. Just remember that the world is not going to end as a result.

Knowing how Michigan’s foreclosure process works equips you with the information you need to ensure that you navigate it carefully and complete it.

The Fundamental Steps of Foreclosure

Any foreclosure procedure has a few important steps.

Varied states around the US have different laws governing foreclosure.

Judicial sale and power of sale are the two methods that various states use to foreclose on a property.

Reach out to us at 313-513-8824 or our contact page, and we would be happy to assist you through the unique foreclosure procedure in Metro Detroit.

In any case, the foreclosure process usually does not reach the courthouse until 3-6 months have passed after the last payment was due. Typically (though not always), a lender may send you many warnings that your payment is passed late or in arrears.

Under Judicial Foreclosure:

  • The judicial system must receive a lawsuit from your mortgage lender.
  • The court will send you a letter requesting payment.
  • You will have 30 days to submit payment to court if the loan is legitimate to prevent foreclosure (and sometimes that can be extended).
  • If you miss a payment within the grace period, a judgment will be rendered and the lender may ask to have your property sold, often at auction.
  • The sheriff issues an eviction notice and orders you to leave the property as soon as it is sold.

Under Power of Sale (or Non-Judicial Foreclosure):

  • Despite the possibility of judicial review, the mortgage lender serves you with documents seeking payment; court intervention is not necessary.
  • A deed of trust is created and ownership of your property is given to a trustee when the specified waiting time has passed.
  • The trustee might then conduct a public auction to sell your property to the lender (notice must be given).

During any kind of foreclosure, notice must be given to everyone who has an interest in the property.

Any contractors or banks holding liens on a foreclosed property, for example, are qualified to receive money from the auction’s proceeds.

What Happens After an Auction for a Foreclosure?

The loan balance is settled with the profits of the sale after the foreclosure.

A shortfall judgment may be rendered against the borrower if the proceeds from the sale of the property at auction are insufficient to repay the debt.

The bank may obtain a deficiency judgment against you, the borrower, to recover the balance of the loan amount that is still owed to the bank following the foreclosure sale.

Some jurisdictions only allow the fair market value of the asset at the time of sale to be used as the basis for a deficiency judgment, while other states let the borrower be held liable for the whole loan amount.

Given that every state has distinct laws, this is an excellent resource that details the deficiency judgment statutes by state.

call up the bank, or work with a reputable real estate firm like us at Wise Property Buyers 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 Metro Detroit, we can help you.

We buy houses in Metro Detroit MI like yours from people who need to sell fast.

Give us a call anytime (313) 513-8824 or
fill out the form on this website today! >>

Another Foreclosure Resource For Metro Detroit MI HomeOwners:

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