For many homeowners in Michigan and around the country, making ends meet is a continuing challenge, and the threat of losing their home a frequent source of anxiety. But before being resigned to the inevitability of foreclosure, it may help to get an idea of exactly what happens in the process.
In Michigan, the foreclosure procedure has a number of stages and can take six to twelve months. Leading up to foreclosure is the period of delinquency. The mortgage must be at least 120 days late before the lender can legally start the foreclosure process, and within this time frame:
- Up to 36 days after the due date, the lender must contact the homeowner to discuss loan mitigation options.
- On the 45th day, the lender will provide written notification of delinquency and the options for loan mitigation, along with an agent to negotiate with the homeowner.
- Up until the 121st day, the homeowner may negotiate options with the lender, including making a partial payment.
After 120 days, unless the homeowner has filed a hardship application, the foreclosure process starts and follows the stages of publication of the Sheriff’s sale date in the country newspaper, the actual Sheriff sale with the listing of the last date of redemption, and the redemption period, which can last six to 12 months.
Once the redemption period expires, if the homeowner has not vacated the property, they will receive a Summons to appear in court, and the Sheriff may physically remove them from the premises.
Why are there so many opportunities to examine loan modification?
Believe it or not, the banks are usually not eager to engage in foreclosure sales, and more often would prefer to discuss other options with the homeowner. If the homeowner, qualifies, a mortgage loan modification may be the best solution for all parties. Unlike a refinance, loan modification changes the terms rather than replacing them, and can include:
- Switching from an adjustable- to a fixed-rate loan
- Extending the terms of the loan
- Lowering the payment on the principal each month
- Adding missed payments to the balance
Loan forbearance can temporarily reduce mortgage payments, but the terms are up to the lender. Although a loan modification can affect your credit score in the short term, the homeowner can restore their credit over time with timely payments. Above all, it makes sense to examine your options that will allow you to keep your home and preserve your credit.