Changes to Mortgage Foreclosure Law in Michigan
In July 2009, Michigan Governor Jennifer Granholm signed into effect several laws modifying the rights of Michigan homeowners regarding foreclosure and loan modification. Understanding the nuances of the law changes and your legal rights can be daunting. Having an experienced legal team by your side can bring a sense of peace and security that knowledgeable professionals are looking out for YOUR rights, not your mortgage companies best interests. Call us today at 866-261-8282 for a free consultation. We offer same day foreclosure prevention and have convenient office locations in Detroit, Ann Arbor, Dearborn, Southfield, Flint or Warren, Michigan to best serve you.
What are the Changes to Michigan Foreclosure Law?
The main change to foreclosure process in Michigan is that mortgage holders must now comply with a 90 day pre-foreclosure process before they are allowed to foreclose a residential mortgage by advertisement. New requirements include the following:
- The mortgage holder must inform the borrower in writing before foreclosing on a mortgage by advertisement. This notice must include a list of approved housing counselors.
- The borrower may request a meeting with a designated representative of the mortgage holder in order to work out loan modification within 30 days of this notice. In this case, the foreclosure may not begin until 90 days after notice has been mailed.
- In the event a borrower does not contact the lender within 30 days, the lender may immediately proceed with a foreclosure by advertisement (posting in legal newspaper).
- A borrower interested in negotiating a loan modification must contact a housing counselor.
- The mortgage holder is required to review the borrowers’ finances in order to determine if a loan modification is feasible. The targeted debt-to-income ratio of 38%, which includes:
- Mortgage principal and interest
- Property taxes,
- Homeowners fees
- The mortgage company may include several features in the loan modification including:
- Reduction of interest rate for a fixed term of at least 5 years.
- Extension of the loan term up to 40 years from the date of the loan modification.
- Deferral of some portion of the unpaid principal balance up to 20%.
- Reduction or elimination of late fees.
- The mortgage company is NOT REQUIRED or obligated by law to provide a modification, even if a homeowner meets the 38% targeted ratio.
- If the borrower is eligible for such a loan modification but the mortgage company chooses not to offer one, the mortgage holder may still foreclose, but not by advertisement. They must foreclose by judicial action.
- If the borrower does not meet the requirements of a loan modification, the lender may proceed with a foreclosure by advertisement or the “posting” method.
Chapter 13 Protection Means Foreclosure Prevention
At any time in the process before a sale (judicial or posting), you are able to file a Chapter 13 reorganization to stop the foreclosure proceedings and set up repayment terms with your lender. The Chapter 13 will:
- Legally stop the foreclosure sale or pre-foreclosure process.
- Initiate repayment terms with the mortgage lenders over a 36 -60 month time period (0% interest repayment for the arrearages).
- Remove a second mortgage or home equity loan to re-balance the value of the home.
- Reduce and defer other unsecured debts in order to provide room in the budget to bring the mortgage current. All unsecured creditors are paid back at 0% interest with no further late reports to the credit bureaus.
- Allow a proposed loan modification through the Chapter 13 plan with the added benefit of court protection during the process.
- Reduce the principal mortgage balance owed on a rental property(s) to current market value and own free and clear within 3 -5 years.
- Improved credit as you progress through the Chapter plan. Becoming delinquent on your mortgage can quickly reduce your credit score. The Chapter 13 reorganization reverses this credit damage by:
- Restoring timely payments to your creditors
- Reducing principal debt that lowers your debt-to-income ratio.
These two factors affect 65% of your credit score.
Chapter 7 to Eliminate Loan Deficiency Debt
If your circumstances have changed such that you cannot or longer wish to maintain the mortgage, filing a Chapter 7 will eliminate further worry or debt obligation on the mortgage(s), utilities or any other unsecured debt obligations such as:
- Credit Cards
- Medical Bills
- Personal Loans
- Other loan deficiency debts (i.e. past car repossession, etc.)
- Judgments or garnishments
The Chapter 7 bankruptcy allows you to wipe the credit slate clean so that you can begin to rebuild your credit and your life after a foreclosure sale, short sale or voluntary surrender.
We are a Helping Hand for Michigan Foreclosure Prevention
Acclaim Legal Services has the legal experience to answer any questions you may have regarding bank foreclosure law in Michigan. Our bankruptcy attorneys are experienced in the new Michigan Foreclosure laws and are available to educate you on your available options and develop a plan to deal with your foreclosure situation. Don’t spend another day stressing about how to resolve your foreclosure and other debts; we are here to help.
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 Detroit, 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.