Michigan, unlike most states, allows two forms of foreclosure.
Filing any chapter of bankruptcy, Chapter 7, Chapter 13, Chapter 11, stops either form of Michigan foreclosure.
Creditor’s choice, of course.
The cheaper way is foreclosure by advertisement, invariably in the Legal News, read by no one, except, people looking for foreclosure notices to solicit business. Realtors, bankruptcy attorneys, foreclosure scam artists.
The more expensive route is through the courts; filing a foreclosure lawsuit. Michigan mortgage companies rarely go this route.
Michigan foreclosure law changed in 2009, in favor of consumers. That law expired at the end of June, 2013.
Instead of just putting the foreclosure notice in the Legal News for four consecutive weeks, and posting a copy of same on your home, first, Michigan mortgage companies had to tell you that you had 14 days to request a modification.
Unfortunately, the vast majority of people miss this opportunity.
I think, because so many have either been rejected for, or are already in the process of, a mortgage modification application.
It is not clear from the initial foreclosure notice that you have to start over, and tell the mortgage company agent, designated in the notice, that you want a mortgage modification.
Merely responding yes, I want a mortgage modification, bought you an extra 90 days. There were other provisions, but, if no modification was reached, and the mortgage company had to agree, it was voluntary on their end, the old process resumed with the four weekly foreclosure notices in the Legal News.
The event noticed was the sheriff sale; the sheriff for the county in which the home is located conducts foreclosure auctions on a regular basis.
Time was, folks other than the mortgage company would bid at these auctions, back when homes had equity. These days, not so much.
Your mortgage company can bid up to the amount you owe, without coughing up any actual dollars. So, if you owe $200,000 on your now $150,000 house, they can bid up to that $200,000.
That sheriff sale is NOT effective immediately.
You have what is called the right of redemption. For 6 months AFTER the sale, you can redeem the property by paying the sale price, plus interest. Most folks can only do this by selling the house, which, of course, only works if the home is worth more than the winning foreclosure auction bid.
Federal law effective January 1, 2014, requires mortgage companies to wait 120 days before giving the first foreclosure notice. So, the thinking is, that 4 months, 120 days, should be shaved from the redemption period.
The package of four bills is backed by Michigan’s banks, which say that the longer redemption period leads to abandoned homes and blight, and that new federal regulations will help people avoid foreclosure. But critics of the measures say the changes will be devastating for Michigan homeowners struggling to save their property. ( from the Free Press article linked to above)
Gee, backed by the banks. Imagine that.