When you file for bankruptcy, foreclosure may not be far behind. As an experienced bankruptcy attorney, I, Walter Metzen can help you understand foreclosure and your rights within these types of situations.
If you already have a foreclosure matter that is pending against you, you may need to act quickly to file bankruptcy if you have not already done so. By doing this, you may be slowing down or even stopping the foreclosure process until the bankruptcy matter is sorted out.
Generally, if you fall more than 3 months
behind on your house payments, your lender
will declare the mortgage in default
and begin to foreclose on your
property.
When you took out your mortgage or home
equity loan, you gave your lender or
mortgage company a mortgage. This
created a security interest or lien on your
property that gives the mortgage company the
right to start foreclosure proceedings
to force a sale of your home (called a
sheriff’s sale or foreclosure sale) because
you failed to pay your mortgage loan
according to the terms of the mortgage
agreement.
Most lenders don't like to foreclose on
your property because the process is costly
and can be difficult. However, most lenders
will foreclose on past due loans if they are
not paid after 3 months.
Most people facing foreclosure are often
experiencing other financial problems. Many
people will ignore the problem, hoping that
it goes away. It is critical that you
develop a plan of action to deal with
your financial situation immediately.
Options include:
It is important for you to understand that there are many, many foreclosure scams out there. Even mortgage companies may be guilty of scams. A mortgage company may tell you that they want to work with you, structure a loan workout, and help you work things out. Unless you have this in writing from the company, be very wary. Many companies have been known to give their customers facing foreclosure a false sense of security and then change their minds.
Do not let this happen to you! Get in touch with me as soon as possible to discuss your foreclosure matters. I can move quickly in order to stop or delay the foreclosure in many situations. However, once a foreclosure has been executed, not even bankruptcy can save the property.
General Foreclosure Procedure in
Michigan
An attorney in the State of Michigan
who is requested to commence an action
for foreclosure must contemporaneously
initiate the following requirements:
- conduct a title search;
- Commence publication of the
foreclosure, which shall be issued
once a week for four (4) consecutive
weeks in a newspaper published in
the county in which the property is
located and the foreclosure sale
must be held not less than 28 days
from the first publication date.
The property must also be posted
with notice of said publication by
the Sheriff within the first fifteen
(15) days of its commencement. The
foreclosure sale is then held at
public auction, with an anticipated
foreclosure sale date approximately
5-6 weeks later;
On VA loans counsel must order the
appraisal on the date the client request
the
Michigan Foreclosure proceedings to
commence. On FHA and conventional loans
no further action may be taken until the
redemption period has expired.
Approximately one week prior to sale
the attorney should obtain the up-dated
escrow figures. In the event that the
escrow figures are incomplete, it is
customary that a sale may be adjourned
on a week to week basis.
Approximately 3-4 weeks after the
sale, counsel should receive the FHA
deed if applicable. At that time,
counsel should calendar the conventional
loans for approximately 30 days prior to
the expiration of the redemption
period. In the event that an
investigation reveals that the property
remains occupied after the sale, counsel
must send a correspondence to the
occupants, by certified and regular
mail, advising them the exact date the
redemption period expires and that they
vacate the property prior to that date.
In the event that upon expiration of the
redemption period, the property remains
occupied, eviction may be instituted.
On FHA loans, allow approximately 90
days prior to the redemption expiration,
since the regional office of the FHA
must make an individual assessment
whether the property is occupied or
vacant.
The recording of a VHA deed can be
accomplished as soon as counsel receives
the conformed copy of the Sheriff's Deed
is returned by the County Recorder,
which generally takes approximately 7-10
days after sale. After recording the
deed, the new owner must arrange for
issuance of an Owner's Policy of Title
Insurance and submit the final title
evidence direct to the VA Regional
Office.
The redemption period
normally runs six (6) months from the
date of sale, however in Michigan, on
1-4 family residences the mortgagor is
entitled to possession, and the rents
and profits, during the redemption
period. Moreover, if the security
instrument is dated prior to January 1,
1965, or the property is in excess of 3
acres in size or the principal balance
has been paid down in excess of
one-third, there is a twelve (12) month
redemption period. If the property has
been abandoned, the period is three
months and if abandoned and there exists
an outstanding mortgage, which the
indebtedness is more than two-thirds of
the original debt, the period is reduced
to one month.
Foreclosure
by Advertisement
In the event that the underlying
mortgage instrument contains the usual
power of sale language, the premises may
be foreclosed by advertisement by
publishing a notice for 4 consecutive
weeks, at least once a week in a
newspaper of the county within which the
premises are located indicating that the
mortgage will be foreclosed by sale of
the premises. A copy of the publication
of notice, must be posted on the
premises within fifteen (15) days after
the first publication of the notice.
The sale must be conducted a public
auction to the highest bidder. The
mortgagor or those claiming under him
have one (1) year after the sale within
which to redeem, except for the
following:
- redemption period is six (6)
months if the mortgage was executed
on or after January 1, 1965 on
commercial or industrial property or
multi-family residential property
exceeding four (4) units or in the
case of a mortgage executed on or
after January 1, 1965 on residential
property not exceeding four (4)
units and not more than three (3)
acres in size where the amount
claimed due at the date of the
foreclosure notice is more than
two-thirds of original indebtedness
secured;
- redemption period is three (3)
months in the case of a mortgage on
residential property not exceeding
four (4) units and not more than
three (3) acres in size if the
property has been abandoned;
- redemption period is one (1)
month in case of a mortgage on
residential property not exceeding
four (4) units and not more than
three acres in size if amount
claimed due at date of foreclosure
notice is more than two-thirds of
the original indebtedness secured
and the property is abandoned. (MCLA
Sub. Sec. 600.3201-3280; MSA Sub.
Sec 27A.3201-3280). Effective May
15, 1986.
Section 3241a was enacted to
encompass properties abandoned after the
institution of
Michigan Foreclosure and may only be
utilized on properties not exceeding 4
units and not more than three acres in
size to reduce the redemption period.
Additionally, the property must be
re-posted and mailings sent to the last
known address of the mortgagor, advising
of the intention to foreclose. Upon
expiration of a 15 day waiting period,
the redemption period will expire 30
days following the mortgage foreclosure
sale.
The mortgagor or any person lawfully
claiming under him, or his personal
representative, may redeem during the
statutory redemption period by paying to
the purchaser at the foreclosure sale,
his personal representative or assignee,
or to the Register of Deeds, the amount
bid at foreclosure sale, plus interest,
a fee of $3 and, where added by
affidavits conforming to statutory
requirements, certain sums advanced by
the mortgages after the
Michigan Foreclosure sale in payment
of property taxes, assessments,
insurance premiums, and amounts
necessary to redeem senior liens from
foreclosure. (MCLA Sub. Sec. 600.3140,
.3145, .3240; MSA Sub. Sec. 27A.3140,
.3145, .3240).
Eviction
Procedure
Upon expiration of the redemption
period and the premises remain occupied,
an eviction proceeding must be commenced
by filing a Summons and Complaint with
the District Court. At the hearing the
Court will determine the date by which
the occupants must vacate. Counsel must
arrange for an inspection of the
premises immediately after the hearing
date. In the event that the property
remains occupied after the date the
Court sets that the premises must be
vacated, a Writ of Restitution must be
filed. Approximately 3-4 weeks after
the Writ is issued the holdover tenants
are removed.
Land
Contract Forfeiture
An attorney in the State of Michigan
who is requested to commence an action
instituting a forfeiture proceeding,
title work must be immediately ordered
to determine who are all the parties in
interest. After receipt of the title
commitment, and where required by the
Contract, a Notice of Intention to
Forfeit Land Contract must be mailed to
all parties in interest. Unless
otherwise agreed to, a 15 day waiting
period must elapse during which the
parties need only reinstate the
delinquent amount. In the event that
there is no reinstatement, a Notice of
Forfeiture is then mailed to all parties
in interest. This notice allows an
additional 15 days to reinstate the
account.
In the event that the outstanding
balance remains and no reinstatement
occurs within this 15 day period, a
Summons and Complaint must then be filed
in the District Court of the Judicial
District in which the property is
located. Personal service must be made
on all parties in interest, upon which a
three week publication commences, which
sets forth the date of the forfeiture
hearing. At the hearing, forfeiture is
normally granted and the judgment will
be in the amount outstanding as of the
day judgment is entered, plus allowable
costs and statutory attorney's fees.
The forfeiture redemption period runs
for 90 days from the date judgment is
entered, unless the contract has been
paid down by 50%, in which case the
redemption period will be 180 days. The
owners are entitled to possession of the
premises during this time. In the event
that redemption does not occur, a Writ
may issued and the occupants removed
from the property. Upon return of the
executed Writ by the District Court, the
document is recorded at the Register of
Deeds, at which time title is vested
solely in the vendor of the land
contract, subject of course, to any
pre-dating interest. In the event of a
reinstatement of the judgment amount,
the vendee is only obligated to redeem
the judgment amount.
REVISED JUDICATURE ACT OF 1961
(EXCERPT)
Act 236 of 1961
600.3140 Mortgage foreclosure sale;
redemption; amount stated in recorded
affidavit; portions of premises.
Sec. 3140.
(1) The mortgagor, the mortgagor's
heirs, executors, or administrators, or
any person lawfully claiming from or
under the mortgagor or the mortgagor's
heirs, executors, or administrators may
redeem the entire premises sold by
paying, within 6 months from the time of
the sale, to the purchaser or the
purchaser's executors, administrators,
or assigns, or to the register of deeds
in whose office the deed of sale is
deposited as provided in the court
rules, for the benefit of the purchaser,
the sum which was bid with interest from
the date of the sale at the interest
rate provided for by the mortgage.
(2) The vendee of a land contract,
the vendee's heirs, executors, or
administrators, or any person lawfully
claiming from or under the vendee or the
vendee's heirs, executors, or
administrators may redeem the entire
premises sold within 6 months from the
time of the sale by paying to the
purchaser or the purchaser's executors,
administrators, or assigns, or to the
register of deeds in whose office the
deed of sale is deposited as provided in
the court rules, for the benefit of the
purchaser, the sum which was bid with
interest from the date of the sale at
the interest rate provided for by the
land contract.
(3) The register of deeds shall not
determine the amount necessary for
redemption. The purchaser shall attach
an affidavit with the deed to be
recorded under this section that states
the exact amount required to redeem the
property, including any daily per diem
amounts, and the date by which the
property must be redeemed shall be
stated on the certificate of auctioneer.
The purchaser may include in the
affidavit the name of a designee
responsible on behalf of the purchaser
to assist the person redeeming the
property in computing the exact amount
required to redeem the property. The
designee may charge a fee as stated in
the affidavit and may be authorized by
the purchaser to receive redemption
funds. The purchaser shall accept the
amount computed by the designee.
(4) If the sum for redemption is paid
to the register of deeds, a fee of $5.00
shall be paid for the care and custody
of the redemption money.
(5) If payments are made as provided
under this section, the deed of sale is
void. If a distinct lot or parcel
separately sold is redeemed, leaving a
portion of the premises unredeemed, then
the deed of sale is void only as to the
portion or portions of the premises
which are redeemed.
(6) The amount stated in any
affidavits recorded under this section
shall be the amount necessary to satisfy
the requirements for redemption under
this section.
