When facing foreclosure, you can keep the house, sell the house or allow the foreclosure to proceed. What you can do depends on where you are in the foreclosure timeline and if you have recovered from your financial crisis.
DETERMINE WHERE YOU ARE NOW IN THE TIMELINE.
- If your mortgage is due on the first, you are delinquent on the second.
- The first notice of delinquency is mailed on the 16th of the month. You are charged a late fee.
- If you do not pay by the 30th, the loan is in default; you are sent a second notice.
- When a loan is 60 days past due, your bank, credit union or mortgage company speeds up the loan and warns you that foreclosure is the next step.
- After 90 days past due, foreclosure begins. In Michigan, the most common foreclosure notice is by advertisement.
- The attorney for your bank, credit union or mortgage company advertises the property for sale in a newspaper for four weeks in a row.
- A Sheriff’s Sale is held on the published date. A deputy conducts an auction and the highest bidder wins (usually the bank). If the sale is adjourned (delayed), a notice is posted at the sale location and in the newspaper.
- After the Sheriff’s Sale, the highest bidder gets a “Sheriff’s Deed” to the property. It lists the last date that you can redeem (take back) the property, usually in six months to one year.
- During the redemption period, you can raise the necessary money to get the property back by getting a new mortgage or you can sell the property or you can live in it for free and leave by the end date.
- In order to get your property back, you must pay off the mortgage, interest and late fees, court costs, attorney fees, title and appraisal fees, taxes and insurance.
- In order to sell the property, you must pay everything listed above or in the case of a short sale, get permission and a waiver of deficiency from the bank.
- In order to live in the home until the end of the redemption period (usually six months), you pay the utilities and do general upkeep.
Source: Michigan State Housing Development Authority, Housing Counselors Training Manual
Facing Foreclosure….What Can You Do? Provided by Ionia County MSU Extension, 50 E. Sprague Rd., Ionia, MI 48846, (616) 527-5357. MSU Extension programs and materials are open to all without regard to race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, marital status or family status. MSU is an affirmative action equal opportunity employer. Handouts provided by Anne Lilla, Macomb County MSU Extension.
MAKE A WORKOUT PLAN WITH YOUR BANK / MORTGAGE COMPANY
WHAT TO DO FIST
- Write a budget. Cut all unnecessary spending. Increase income. What can you promise and realistically do? You should spend 30% or less of your gross income for a mortgage and only 11% for all other monthly debt payments.
- Call your bank or mortgage company as soon as you have a budget. Ask to speak to someone in the Loss Mitigation Department and ask for a Workout Package. A workout is a plan between you and the bank or mortgage company to decide how you will pay your mortgage default. To negotiate a workout, know what to ask for and be assertive (not rude).
- Fill out the workout form promptly, keep a copy and send the form back by certified mail. Include a Hardhsip Letter that explains your financial crisies and when and how you will recover.
- Keep a record of all calls and letters: dates, times, names and phone numbers.
- If the lender does not allow partial payments, save the money in a separate account each month. You wil have a lump sum for a workout or to move if you lose the house. Do not pay other debt with it. focus on saving the house.
- Short-term: Request a delay of the foreclosure sale. Because the Sheriff’s sale cuts off all workout possibilities, get a written agreement from your bank or mortgage company to delay the sale. Keep on top of dates. Move quickly.
- Long-term: Pay the bank payments and fees and keep payments current.
- Forebearance – Eliminate the default (what you owe) by making your regular house payment AND some of the past due amount for a certain number of months. This method works if you had temporary financial difficulites and are back on track AND you have enough money to pay the extra amount each month. Do not agree to an unrealistic plan.
- Loan Modification – When you can no longer afford the original loan terms due to a permanent change in circumstances AND the bank or mortgage company wants to avoid foreclosure too you can ask them to: