Less than two years ago, Michigan foreclosure law was changed in the face of the greatest foreclosure crisis since the Great Depression.
Mortgage companies were required to send an initial foreclosure notice that gave the homeowner the opportunity to request a modification.
If he did so, the house went off the foreclosure track for 90 days, time for the mortgage company to review documents and decide whether to grant a modification, and on what terms.
It did not change the redemption period, which is six months from the foreclosure sale date for most residences.
New bills have been introduced to change that law, reducing the redemption time from 6 months to 3 months.
During the redemption period, the homeowner has the right to pay off the foreclosure sale price, with interest, and keep the home.
In the old days before the real estate bubble burst, this was usually done by selling the home.
That was when homes had equity in them, enough to pay off the mortgage debt and still put something in the owner’s pocket.
Not so much any more.
Most homes cannot be redeemed or re-financed by the homeowner.
Obviously, if you shorten that 6 month time period to 3, even fewer homes will be redeemed.
The banks say hey, we added a 3 month delay before the foreclosure sale, so lets take 3 months off the back end, comes out the same!
Except that the lowering from 6 to 3 months would be permanent, and the up front 3 month POTENTIAL delay expires under these bills.
Most homeowners do NOT request the modification after getting the first notice, so they never got the extra 3 months anyway.
The politicians say most states do not even have redemption periods.
Well, I have not researched that, but many states require judicial foreclosure, that is, they make the mortgage company sue you to prove their case.
Let’s drop the redemption period altogether, and throw out foreclosure by publication, and make the banks take you to court.
The Truth About Michigan Foreclosure Law Changes