Home Foreclosure Prevention and Michigan Foreclosure Law
Unfortunately, Michigan’s foreclosure postings are among the highest in the country. The lagging economy and effects of sub-prime mortgage lending have created a difficult environment for homeowners. Fortunately, there IS legal protection, relief and reasonable repayment terms available for homeowners facing foreclosure.
With foreclosure, time is of the essence. Call one of our licensed attorneys today at 866-261-8282 for a free consultation on how to:
- Prevent a foreclosure sale from occurring or becoming behind on your payments;
- Legally stop a foreclosure sale if the mortgage company has started the foreclosure process;
- Find debt relief from loan deficiency debt if you are no longer able to maintain your mortgage payments.
Our firm offers SAME DAY foreclosure protection.
With over 50 years of combined attorney experience in foreclosure prevention and debt resolution, it is time to put our experience to work for you. Call us today for a free consultation on how to best deal with your mortgage situation or pending foreclosure sale. With an A+ rating with the Better Business Bureau and a reputation of excellent customer service, you can trust our law firm to help you resolve your foreclosure matter as well as other debts you may have to improve your overall finances.
Foreclosure Law in Michigan
The foreclosure sale is often referred to as a “Sheriff’s Sale.” People are often concerned that an actual sheriff will come and evict them from their home on that date and/or hold the auction on the property. Neither is true. This term simply refers to the public auction that is held at the county municipal offices on the date indicated on the foreclosure notice.
At this auction, a third party has the opportunity to bid on the property and take over the banks position as the mortgage holder. If no one makes an adequate offer, the mortgage continues to be held by the bank for the 6 month redemption period. There are some instances where the redemption period is longer than 6 months depending on the size of the property or the amount owed on the property as compared to its value.
If you intend to keep your home, it is important that you take steps prior to the judicial foreclosure or Sheriff’s Sale. After the sale occurs, all of the power shifts to the bank. So time is critical if you are behind on payments or facing a foreclosure sale date to regain control and prevent the foreclosure from occurring.
You can legally and immediately stop a foreclosure sale by filing a Chapter 13 plan prior to the sale. In fact we offer same day protection.
Read below to understand the four “R”s of Chapter 13 Foreclosure Prevention: Restructure, Rebalance, Reduce and Resolve.
Prevent Foreclosure: Restructuring Your Mortgage and Other Debts
Many times people fall into foreclosure because of an increased mortgage payment that they cannot afford or issues elsewhere in their monthly budget. By restructuring aspects of your mortgage or other bills, you can bring your budget back into alignment in order to afford your mortgage payments.
The Chapter 13 provides many unique avenues to restructure your mortgage and other debts to improve your budget and credit.
- Loan Modification: Perhaps you have tried unsuccessfully to work with your lender on a loan modification. Since the process is entirely voluntary for the banks, you may have felt powerless to get the revised terms you desire.
Through the Chapter 13 process, our attorneys have had much success in negotiating successful loan modifications with mortgage lenders. A Chapter 13 program provides additional benefits that make it advantageous to seek a loan modification through the Chapter 13 plan, including:
- Court oversight of the process: A Judge and Trustee will keep all parties accountable for the process.
- Home Affordable Modification Program (HAMP) protection: Servicers must consider borrowers in active bankruptcies for HAMP modifications.
- Team of professionals dedicated to improving your finances. Our attorneys will deal directly with the law team at the mortgage company or assigned counsel; an avenue hard to acquire otherwise.
- Escrow Acceleration: Escrow acceleration occurs when the mortgage company advances or pays for property taxes and/or homeowners insurance they have not previously collected through the monthly mortgage payments. In this circumstance, the mortgage company typically wants to recoup the funds they advanced within a six to 12 month time period. This can often dramatically increase a monthly mortgage payment and for most people, makes their budget unbalanced.
Through the Chapter 13 plan, we can spread this escrow deficiency over the life of the plan (36 – 60 months), which will lower the monthly payment. In addition to this extended time, the escrow deficiency is paid back at 0% interest with no continued penalties.
- Second Mortgage or Home Equity Loan: We can legally remove your second mortgage or home equity loan through the Chapter 13 in a process called “Lien Stripping.”. This will convert the second mortgage or equity loan to unsecured debt. The benefits of this are as follows:
- This will create a lower monthly payment, overall, going toward your mortgage.
- Under the terms of a Chapter 13, we can often eliminate a portion, if not the majority, of all unsecured debts, including the stripped lien.
- The stripped lien would then convert to 0% interest.
- In addition, all payments are deferred to your unsecured creditors (including the stripped lien) until you are caught up on your secured obligations such as your first mortgage, vehicle, etc.
- Mortgage Arrearages: All mortgage arrearages are reduced to 0% interest. There are also no continued late penalties assessed by the mortgage company.
- Adjustable Rate Mortgages: Under the terms of the Chapter 13, our attorneys can propose a fixed or lower interest rate. Under the current laws, the mortgage company is not bound to our proposed terms.
But, their leverage of foreclosure is removed with the filing of the reorganization so they are typically more likely to negotiate. Our Chapter 13 attorneys can also propose to modify the loan to a fixed rate for the duration of the plan.
- Other Debt Restructuring
- Vehicle loan: We can reduce the interest rate, extend the terms of the loan and possibly reduce the balance you owe depending on how long you have financed the vehicle.
- Unsecured debt, such as credit cards or medical bills: The debts are deferred until you are caught up on your mortgage payments and paid back at 0% interest.
- Rental Property: We can reduce what you owe on your rental property to the current market value. At the completion of the 36-60 month repayment program, you will own the property free and clear.
Prevent Foreclosure: Rebalancing Your Budget
Prevent foreclosure by balancing your budget to allow you to regain the ability to make you mortgage payments. Many people find their budgets become unbalanced due to factors such as:
- Loss of income or underemployment
- Increases with other expenses (day care, gas, utilities, vehicle maintenance, etc.)
- Increased credit card interest rates and required minimum payments
- Increases to their mortgage payment due to an adjustable rate mortgage, escrow deficiencies, etc.
By proactively dealing with budget issues, you may be able to avoid missing mortgage payments and an eventual foreclosure proceeding. Depending on your budget and total debt, you may find that you need a debt elimination program like Chapter 7 to totally eliminate unsecured debt that is weighing down your budget and draining funds that could be used to maintain your mortgage.
Alternatively you can structure re-payment terms through a Chapter 13 debt consolidation plan. The program automatically prioritizes payments to secured creditors such as your home or vehicle while deferring payments to unsecured creditors such as credit cards or medical bills. Through the debt consolidation plan you are able to reduce other debts such as credit card and medical bills in order to keep your mortgage on track.
Prevent Foreclosure: Reducing Debt
The purpose of the Chapter 13 is to make your “best efforts” to pay back your creditors over the duration of the program (36 – 60 months). Whatever unsecured debt the remains at the end of the plan is legally eliminated through a court discharge. This includes debt such as:
- Credit Cards
- Medical Bills
- Personal Loans
- Loan Deficiency Debt
- Second Mortgage(s) and/or Home Equity Loans
By legally reducing debt, you will be in the best position to maintain a balanced budget without the fear of creditors trying to collect on debts that could derail your budget in the future. For an example of this Chapter 13 plan debt reduction, click here.
Prevent Foreclosure: Resolve Your Debt with Full Court Protection
Consider the Chapter 13 to be a large umbrella protecting you and your assets from your creditors and legal proceedings such as a foreclosure or repossession. The plan provides comprehensive legal protections from:
- Home Foreclosure
- Vehicle Repossession
- Creditor Calls and Harassment
- Negative reports to credit agencies
This court protection provides you with the breathing room to get caught up on your bills without the threat of further legal action.
Improving Your Credit While Preventing Foreclosure
Experiencing a completed foreclosure on your home can be one of the most damaging factors for your credit. People are often times under the impression that filing a bankruptcy is detrimental to your credit and worse than undergoing a foreclosure. This is simply not true. If you are behind on mortgage payments, your credit has already been negatively impacted.
If you elect to stop the foreclosure with the Chapter 13 Reorganization, your credit will be improved through:
- Regular payments into the program for improved payment history and
- Reduced debt for improved debt-to-income ratio.
- These factors combined influence 65% of your credit score according to FICO, a Chapter 13 Plan improves your credit score by improving the above 2 factors.
This improved credit allows you the opportunity to refinance the loan for better terms – something that is typically not possible when you are behind on payments and facing foreclosure.
Mortgage lenders indicate that filing a Chapter 7 prior to the foreclosure sale occurring will create a more favorable credit rating than undergoing a foreclosure. For future lending, it is more favorable to have a bankruptcy on your record than a foreclosure. Within two to three years of your Chapter 7 discharge you would qualify for a conforming home loan or an FHA (Federally backed) loan. With a straight foreclosure on your record, it typically takes five years before you would qualify again for these types of loans. This is due to lender concerns over collections on unresolved loan deficiency debt as a result of the foreclosure sale.
Trust the Foreclosure Prevention Specialists
Understanding how to best prevent a foreclosure can feel overwhelming. Reach out to Acclaim Legal Services to discuss how to put a legal end to the threat of foreclosure. We have attorneys available to speak to you immediately to discuss all of your available options and put a plan in place to resolve your mortgage and other debts.
Gain peace of mind from working with experienced professionals and dealing with the foreclosure head-on. Call us today at 866-261-8282 for a free consultation or to schedule an appointment at one of our six offices in Detroit, Ann Arbor, Flint, Dearborn, Southfield and Warren, Michigan.
We offer free in-office or phone consultations to review your personal circumstances, analyze your situation and advise you on the best course of action. We specialize in bankruptcy law, debt resolution, foreclosure prevention and credit repair. We have offices in Southfield, Dearborn, Flint, Ann Arbor and Warren, Michigan. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.