Michigan's new foreclosure law became effective on July 5, 2009. The purpose of the law is to slow the rate of foreclosure. The law requires mortgage companies to notify their borrowers prior to starting foreclosure and offer to them the right to request a meeting. The letter has instructions and a phone number of the mortgage company's agent. The borrower must contact the agent designated by the lender within 14 days to request a meeting. If the borrower requests a meeting, the lender may not start foreclosure for 90 days after sending the letter. The letter also contains a list of home foreclosure counselors who the borrower may contact for assistance at the meeting. If the borrower fails to request a meeting within 14 days after receiving the letter, the mortgage company can proceed to foreclosure by advertisement which generally takes approximately 4 weeks. If you are interested in saving your home and or slowing down the foreclosure process the borrower should request a meeting.
At the meeting with the mortgage company's representative, the mortgage company must present a modification, if the borrower meets certain qualifications set forth in the statute. If the borrower fails to meet the qualifications set forth, the mortgage company may proceed to foreclosure by advertisement after waiting 90 days. If the mortgage company fails to present an offer, they may not proceed to foreclose by advertisement and must start a judicial foreclosure which is much more time consuming and costly to the mortgage company.
In addition to sending a letter, the mortgage company must also publish their intent to foreclose in the legal news with the borrowers address. The address is published to allow others parties who may be able to help the borrowers contact them. The borrower at this point is besieged by an avalanche of letters. If the borrower is interested in saving the home, many of these parties will not be help them. For example realtors are interested in helping Debtors sell the home, most likely at a short sale which is generally not in the best interest of the borrower. Others promising assistance with loan modification, simply cannot deliver. Generally, it is a waste of money to pay anyone who promises a loan modification. This is because the mortgage companies generally do not negotiate with the borrower or their agents. The mortgage companies generally analyze the data requested by them in deciding what if anything to offer to the borrower.
Most people who have fallen behind on their mortgage have already attempted a loan modification or forbearance agreement. In order to obtain a loan modification, most mortgage companies request a hardship letter, a tax return and proof of income. The mortgage company analyzes the information to determine what terms they may offer. If you have an adjustable rate interest or high interest rate the mortgage company may agree to a fixed rate and roll the delinquent payments into the loan. Most people have experienced great frustration in dealing the mortgage companies because they often lose information requested and take several months to respond to requests for modification. This is because mortgage companies are overwhelmed by delinquencies. In addition, the owners of the mortgages are often different from the servicing agent. The servicing agent may not have the authority from the owners to enter into a modification. The servicing agent may also have a disincentive from entering into a modification since they collect fees for late payments, property inspections etc. The government, however, has offered some mortgage companies some income incentives to enter into modifications.
One of the best options for a borrower facing foreclosure is to get advice from an attorney who specializes in consumer bankruptcy and handles both Chapter 7 and Chapter 13 cases. In times of crises it is important to get an objective opinion on how to handle the problem. An attorney may offer advice on how to best protect the assets and income of the Debtor. For example, borrowers with second mortgages may be able to strip off the second mortgage leaving the borrower more money to pay on the first mortgage. Also borrowers with significant other debts may be able to get rid of those creditors or substantially reduce the payment on those debts. Many borrowers also exhaust 401k savings in futile attempts to deal with their creditors. If you are in foreclosure or are having significant financial problem it is best to consult an expert for help in solving the problem.
Information provided by Board Certified Bankruptcy attorney John A. Steinberger. Detroit bankruptcy lawyer Mr. Steinberger has the experience and resources to accurately represent individuals and families in Chapter 7 and Chapter 13 bankruptcies. To contact John A. Steinberger & Associates, please call 1-866-690-2140 or submit a request using our online form.