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Michigan Bankruptcy Mortgage Options (Part Two)

This is the conclusion of a two part series, part one on bankruptcy mortgage options can be found here.

Now, you cannot force the mortgage company to foreclose, or take your house back.

They might agree to a short sale, but, as with a modification, you cannot force it on them.

They might accept a deed in lieu of foreclosure, in lieu is French for instead of, because it saves them a lot of time and money versus the foreclosure process, but, again, you cannot force it on them.

If you do this, make sure the paperwork states the mortgage balance equals the value of the home.

And if you have a second mortgage, forget about a deed in lieu, and they will also have to sign off on a short sale.

If they foreclose on your mortgage, great, save your money for the next house.

But, first, get your monthly budget together, and consult a bankruptcy attorney.

For a second mortgage to foreclose, they have to pay off the first. Ain’t gonna happen.

If the first mortgage holder forecloses, you still owe the balance on the second, and whatever other debts you have.

In Michigan, if the first mortgage forecloses by publication, there is an auction, and if they bid what you owe them, after the 6 month redemption period, they get the house, and you owe them nothing.

So if you can handle your other debts, and have no second mortgage, no need for a bankruptcy, at least until the foreclosure sale.

FORECLOSURE SALE PRICE

You will have to check the sale price after the auction, nobody tells you. Your county sheriff runs the sale, so their office will have a record of the sale price.

It you owe $200,000, and they bid $100,000, and that is a commercially reasonable price, you still owe the difference even after they take your house.

It does not matter what they get when they sell the house later. Your potential liability is fixed by the foreclosure sale auction price.

My advice, as always, get the facts.

What can you sell your house for, right now, as is, no painting or fix-up?

How much do you owe?

What is your realistic monthly budget, income and living expenses?

Assume home values will continue to go down, that the cost of other living expenses, food, fuel, et cetera, will go up, and, your income, will stay the same or go down.

Can you afford to stay in your house?

Does it make economic sense to do so?

Image credit:  Dreamstime

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The Real Truth About Mortgages (Part One)

This has been the most common question I get for a long time, so I will periodically post on the possible answers. If you are current, and can afford to continue paying, there is really no bankruptcy alternative. You can stop paying, the so-called “strategic default“. Unfortunately, there is no accurate prediction as to whatContinue Reading

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More Michigan Bankruptcy And Foreclosure News

house

The bailout cost for the “too big to fail” banks and mortgage companies has not even peaked. Taxpayers, like Joe Inhoch, our new fictional blog character, are on the hook hundreds of billions more, counting only the Fannie Mae and Freddie Mac loans that go south. Our politicians already already bailed out those companies, with Joe’sContinue Reading

Foreclosure In Michigan

Foreclosure is the legal process for mortgage companies taking your house. It is much in the news these days, with mortgage companies being questioned on the legal documents they produce in courts, in cases of judicial foreclosure. Mortgage simply means: debt secured by real estate; pledging your home as collateral, or security, for a loan.Continue Reading

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What Can You Do To Save Your Home From Foreclosure?

The housing market gets worse, more foreclosures happening, and more foreclosures coming. Household wealth declines, another predictor of increased bankruptcy filings to come. Even the rich and famous are joining in, word is Mel Gibson facing foreclosure on his Malibu, California properties. People are waiting for loan modifications to save their home are forced intoContinue Reading

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Judicial Mortgage Modification Will Work!

Mortgage cramdown, or judicial mortgage modification, will help prevent home foreclosures and will NOT disrupt the residential mortgage lending market. So says a new study by the Federal Reserve Bank of Cleveland. For a less scholarly explanation of Chapter 13 judicial mortgage modification, see the L. A. Times article by Lew Sichelman. Perhaps my favoriteContinue Reading

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One Response to Avoid Foreclosure With Non-Bankruptcy Cramdown?