Foreclosure/Mortgage Assistance

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1 The foreclosure process takes no less than 7 months and usually up to 12 months from the last accepted payment. Have conversations with mortgage lenders early and often. It is strongly encouraged to utilize a HUD-Certified Foreclosure Prevention Counselor as they often have direct relationships with lenders and also are trained to work through this process. To find the most updated list of approved counselors in your local area in Michigan please use this with the caller: Foreclosure/Mortgage Assistance Community Housing Network s Foreclosure Counselors can serve most people in Southeast Michigan. Contact Paul Stanford: pstanford@chninc.net Oakland County Foreclosure Education & Assistance Program (FEAP) Oakland/Macomb (800) Wayne (313) Oakland County Housing Counseling: (248) (248) , Elizabeth Lake Rd., Suite 1900, Pontiac, MI toll free at , ext MSHDA for mortgage loan modifications Lighthouse Community Development x2426 for mortgage and foreclosure counseling. Or Lighthouse ex 2426 OLHSA If one has equity in their house has a grant to help with a payment or two. HAS FUNDING FOR DELINQUENT PROPERTY TAXES.

2 Mortgage/Credit Counseling St. Antoine HOPE Hot Line HUD approved housing counselors Legal Aid and Defenders HOPE through HERA (Housing and Economy Recovery Act of 2008). Free counseling online at or toll free at Macomb County Foreclosure Education & Assistance Program (FEAP) Macomb (800) MSHDA MI State University Extension for HRC Call Hope Center s Southwest Solutions Groesbeck Hwy Fraser, MI Community Action Centers: (New Haven) (Mt. Clemens) (Warren) Partial Claim: (FHA or PMI insured loans only) The insurer may grant an interest free loan for the delinquent amount to bring the account current. Foreclosure definitions: Judicial Foreclosure: Foreclosed through the court system

3 Non-Judicial Foreclosure: Running an ad in the paper (most done this way) Default: The non-payment of a mortgage debt Foreclosure: legal process of obtaining the title to real estate collateral Estimated Foreclosure Time line Owner Occupied Timeline: The loan is late one day after the due date, however, there is usually a day grace period, The loan is not reported to the credit agency until it is 30 days late. Legally the foreclosure process can start the day after the loan is late, Most agencies will not take action until the loan is days late, The goal for most institutions is to protect the investors (lenders). Thus, the redemption period, The homeowner has up to one year to find replacement home from first missed payment. First Month Missed Payment : The first month your payment is missed your mortgage company is likely to contact you by mail and/or phone to inform you of your delinquent status. Second Month Missed Payment : The mortgage company is likely to begin calling the contact numbers that they have for you in order to discuss why you have not made payment. It is important for you not to avoid their phone calls. Try to stay calm on the phone and explain to them your situation and what you are trying to do to resolve it. You still may be able to make one payment at this time to prevent yourself from falling three months delinquent. Third Month Missed Payment : At this point you are likely to receive a letter form the mortgage company stating the amount you are delinquent, and that you have 30 days to bring it current. This is called your Demand Letter or Notice to Accelerate. If you do not pay the specified amount or make some form of arrangements by the date given, they are allowed at that time to refer you to foreclosure or accelerate your mortgage. They are unlikely, to accept less that the total due, without arrangements if you have received this letter. ***Foreclosure/Acceleration: This means that they forward your account to their attorneys. You still have time to work something out with the mortgage company. Fourth Month Missed Payment :

4 Now you usually are nearing the end of the time allowed in your Demand or Notice to Accelerate letter. If this expires and you have not paid the full amount or worked out arrangements you will be referred to their Attorneys. At this time you incur all attorney fees as a part of your delinquency. The attorney then schedules a Sheriff Sale, which is the actual date of foreclosure. This is Not a move-out date! Sheriff Sale Date: This will be scheduled for approximately 6 six weeks after the attorney receives your file. You have up until this date to work out arrangements with the mortgage company or to pay the total amount owed (Reinstatement amount). After the Sheriff Sale if nothing is done to resolve the situation you enter your Redemption period: State Law in Michigan requires that this period be no less than 30 days and no more than 1 year. Most mortgages allow 6 months. You will be notified of your time frame on the same notice that states your Sheriff Sale date. This is still your time to reside in the home. For more information ask for the Rights after Sheriff Sale handout from our office. ***Important: Stay in contact with your mortgage company, and seek assistance as early as possible. Remember all of these dates are estimated, and may vary according to your individual mortgage contract. This time line does Not Apply for Mobile Homes or Land Contracts. Terry Gibb at the MSU Extension Center often coach callers that if they know that they will be losing the house to start diverting funds during the redemption period to save for a security deposit and rent. He advise to take advantage of the redemption period to prepare. Terry added the following advice: 1. Stop paying homeowners insurance as they no longer own the home, convert to renter s insurance. This is a cost savings. 2. Begin to look at the household items. What are they really want to take with them if they get evicted? Sell what they can to raise more money now. Renters of Foreclosed Homes As of May, 2009, home renters are now protected under President Obama s new housing law. In the past, the legal process gave tenants of foreclosed houses 30 days to get out. Under the new law, the legal process allows renters at least 90 days to find better housing.

5 Tenants of Foreclosed Properties Rights under Foreclosure Law: At least, 90 day eviction notice of foreclosed property with or without a lease The right of the tenant to remain in the home for the term of the lease if home is to be rented out. If the NEW owner will live in the home, the lease can be terminated through the 90 day notice. Once the tenant is given notice, he/she must begin to look for new housing. Their security deposit should be protected but there are many abuses of this in these situations. The renter has 90 days to find a new place and their top priority is to save for the security deposit and first month s rent. Options to keep home: Forbearance: a temporary delay in making monthly payments Re-payment Plan: the amount that the client is delinquent is spread out over a set period of time and added to the regular monthly payment usually 3 to 12 months. Loan Modification: the amount that the client is delinquent is added on to the principle balance of the loan and amortized out over the rest of the life of the loan. Options to not keep home: Pre-foreclosure sale: Mortgage Company can postpone the foreclosure to allow client time to sell the property. Short Sale: Mortgage Company may let the client sell the home for fair market value, as a settlement of the debt. Deed-In-Lieu: If the client has been unable to sell the mortgage company may allow the client to give back the home, preventing the foreclosure. Sheriff Sale: when an investor or lender makes an offer to by the property for balance of the mortgage.