Talk to Your Lender
The best first step you can take, even before your lender publishes a notice of foreclosure, is to talk to the lender. Many people worry that approaching their lender can make a situation worse, but that’s simply not true. There are still many, many Michigan homes sitting vacant that were abandoned or foreclosed upon, and it costs your lender a lot of money and time to take on a new home. In most cases, when you go to talk to your lender as soon as possible, they’ll work with you to find some sort of help or payment plan. Your lender may offer:
If you have been unable to make payments recently because of a major life event — you lost your job, are going through a divorce, or there’s a serious medical condition in the family — you may be able to ask your lender for forbearance. In many cases, your lender will temporarily halt, or at least reduce, your payments. This gives you a little time to get back on your feet without incurring massive debt or falling so far behind on your payments that you can’t catch up.
Another way a lender may help you avoid or stop a foreclosure in Michigan is to set you up with a payment plan or restructure your loan. Typically, this adds the payments you’ve missed onto your loan, so you’ll still be paying them, but restructuring gives you a bit more time to catch up on payments.
It’s always good to remember to talk to your lender as soon as you think you might have trouble making a payment. Most lenders want to work something out with you and will try to work with you as best they can.
Options After Your Michigan Foreclosure Notice Has Been Published
If you weren’t able to work something out with your lender, or if your notice of foreclosure has already been published, you still have a few options to stop a Michigan foreclosure. But first, it’s important to understand how the Michigan foreclosure process works, so you know what your options are, and how long you have to stop your home’s foreclosure.
Understanding the Michigan Foreclosure Process
The way foreclosure works in Michigan is primarily nonjudicial, which means it happens out of court. It is possible for a lender to file a lawsuit to foreclose on your home, but it rarely happens in Michigan. In a nonjudicial foreclosure process, the lender must post a notice of sale for your home for four consecutive weeks. The notice will also be posted on your property.
Technically, your lender can foreclose on your home after one missed payment, but it’s very rare that a lender will do that. Usually, they’ll charge a late fee penalty, or at least send a Notice of Default before beginning the foreclosure process. Though most lenders are upfront about foreclosing, it’s important to remember that they do not have to notify you in advance of beginning the foreclosure process. At any point in this process, you may either pay back the entirety of your missed payments, or you may be able to arrange a short sale. Let’s look at both of those options:
In most cases, you are able to reinstate your loan up until the sale date of your home. To reinstate your loan, and stop your Michigan foreclosure, you’ll have to pay back:
- All of the payments you’ve missed and that have become due over the foreclosure process
- Any applicable late fees charged by your lender
- The cost of property inspections conducted during the process
- The costs for the foreclosure process, as well as any attorney or trustee fees
- Sometimes, you may also have to pay a recording fee to reimburse your lender for the cost of the notice of cancellation of the sale
- Any other fees associated with the foreclosure process, or the lender’s expenses in regards to foreclosure of your home
If you’re able to pay back these fees, it’s best to do so as soon as possible. This can help keep the reinstatement fee as low as possible, and it ensures you get to keep your home without worry of foreclosure.
Arranging A Short Sale
Before your home goes to the Sheriff Sale (Michigan’s version of going to auction), you can arrange a short sale to avoid foreclosure. A short sale is much easier on your credit than a foreclosure. You must talk to your lender about a short sale, as in the arrangement they agree to accept less than you owe on the home if you can find a buyer. Often, buyers for short sale arrangements are third-party investors who will offer you cash for your home, and who will purchase it as-is, without any further work or trouble on your end.
Though a short sale will still give you a bit of a credit hit, it won’t be as bad as a foreclosure. It also helps you walk away from your troublesome home with as little hassle as possible. Learn more about the benefits of a short sale over a Michigan foreclosure in this blog.
After Your Home Goes to Auction
After your lender has posted a notice of your home’s sale for four consecutive weeks, they’ll hold the Sheriff Sale for your home. The public notice will list the date, time, and location of the Sheriff Sale. After the Sheriff Sale, you still have a bit of time to redeem your home.
In the state of Michigan, most foreclosed homes have a redemption period of six months following the date of the Sheriff Sale. If you owed less than two-thirds of the original loan amount, your home will have a one year redemption period. If your home was vacant or abandoned, you’ll only have one month.
This redemption period gives you time to purchase back your home.
Redeeming your Foreclosed Home in Michigan
After the Sheriff Sale, you’re able to remain in your home, attempt to sell it, or work to redeem the home on your own for the extent of your redemption period. This means you still have time to stop or reverse your Michigan foreclosure.
In most cases, homeowners have a six month redemption period. You may redeem your home by reimbursing the purchaser for the full amount they paid at the Sheriff Sale. This amount will include any property taxes they had to pay, any insurance premiums, as well as any homeowners’ association assessments.
At this point in foreclosure, there are innumerable costs and fees to keep up with, and it may not be possible or practical for you to redeem your foreclosed home yourself. It’s good to know that you may also sell your home during the redemption period.
Selling Your Home During the Redemption Period
Selling your home during the redemption period isn’t always easy, but it is possible. If you’re able to find a buyer, your home will be technically “redeemed” when they purchase it for the same costs associated with the foreclosure sale. If you’re able to sell it for more than the redemption price that is owed, you can pocket the difference.
Similar to a short sale, a sale made during the redemption period won’t allow you to keep your home, but it can help salvage some of your credit, and in some cases, you may be able to take a bit of money away from the deal. This can help you move on with your life with as little hassle as possible.
A Michigan foreclosure is difficult to stop, but it most certainly can be done. If your home is in foreclosure, or you’re worried about the risk of an impending foreclosure, know that you do have options.
If your West Michigan home is in foreclosure, Renewed Homes can help. We purchase homes quickly, and in cash, so you can get out from under that troublesome home before it’s foreclosed on. Give us a call at 269-362-0931, or contact us online today for your free cash offer.
Rehab vs. Selling
When it comes to selling or rehabbing your home, you want to make the right decision. This guide will give you all the information you need to make a decision that’s best for you and your family.
Cost of Selling Your Home Through a Retail Transaction
Homeowners enter into the retail transaction process because it’s the only option they know. This guide will help you better understand the transaction process.