| Foreclosure Process
With many homes in foreclosure and even more families facing foreclosure, most people find themselves in situations that they do not understand. It is impossible to control a situation if you cannot understand it. With my years of experience in helping people in foreclosure, as well as bearing through the process 2nd hand, I have been able to teach people the process of foreclosure and repossession, and showed them how to remedy their problem.
In this Blog I want to teach you the process of Foreclosure, all the way through the repossession of the property. This process is not unique to Michigan, but the rules and timelines are.
Pre-Foreclosure
This is the time frame from when you fall behind in your payments until the property until it is sold at Sheriff’s Sale. About 60-90 days after you stop making payments on the property, the attorney’s for the Lender will file paperwork with your County’s Sheriff’s Department. They will set a date for the Sheriff’s Sale, usually 5-7 weeks after the paperwork is initially filed. When they filed this paperwork, they will need to Publicly advertise the sheriff’s sale 6 times, including in a local newspaper or a Legal Newspaper and once on the front door of the property to be sold. After this process has been completed, the property will go to auction at the Sheriff’s Sale at a date and time
Anytime during the process of Pre-Foreclosure, you may Re-instate your loan by making up the payments. I’m sure the lender and lender’s attorney will send you plenty of notices as to the amount and way to make up the payments. This would end the foreclosure process and you would be able to keep the property, and make payments on time as usual.
Sheriff’s Sale
The Sheriff’s Sale is a public auction in which the property will be sold to the highest bidder. It is conducted by a member of the Sheriff’s department… someone who has usually never served a day on the Force though. At the Sheriff’s Sale, each property’s common address, and Permanent Parcel Number is read (if there is no common address, the legal description is read). After the property is adequately described, the bidding begins. Almost every time, the bank will bid, via Cashier’s check included with the sheriff’s sale documentation, the amount of what was owed on the property at the time of the sale. The sale is also open to investors who can bid on properties. Investors tend to only bid on properties that have lots of value with very little owing. After the highest bid is placed, the sale is completed. The bank is typically (99%) the highest bidder. After the sale is completed, the redemption period begins. Once a property passes through Sheriff’s Sale, the bank will not re-instate the loan.
Redemption Period
The Redemption Period is the time between the Sheriff’s Sale and the Eviction. During this time, the property owner (homeowner) may buy back the home or sell it, as long as the party who purchased it at Sheriff’s Sale is paid off. The Redemption Amount is determined by the price that was paid at Sale plus interest. The interest is determined by the interest rate of the loan at time of the Sale. The Redemption Period typically lasts 6 months; except when less than except when less than 50% of the original loan amount is owed, or the property is greater than 3 acres, then the Redemption Period lasts for 12 months.
The important part about the Redemption Period is that the Property Owner (aka the Homeowner) still has full rights to the property. They have the right to live on the premises and to sell premises. The only time the Redemption Period expires early is when the property is abandoned. Abandonment is defined as no one occupying the premises and the premises is not Listed For Sale. The important thing to remember about the Redemption Period is that the property may be sold, which keeps a Foreclosure off your Credit. With a Foreclosure on your credit, you will not be able to Finance a home for 2 years or more. I recommend contacting a Real Estate Professional like Myself about selling the property in Foreclosure.
Eviction
After the Redemption Period has ended, the Party who bought the property at Sheriff’s Sale, will have full rights to the property. Typically (99.9%) they will have the previous owners and occupants legally evicted from the Premises. Some Banks have a program called Cash for Keys. Cash for Keys is a program in which the bank will pay you to move out of the property, while leaving it in good condition and “Broom Swept” clean. Under that program, the Bank will usually pay the occupants being removed from the premises somewhere between $500 and $2500, which is basically the actual costs of having someone legally evicted. Not all Banks offer this program, and if an investor buys the property at the sheriff’s sale, they most likely will not offer that program.
Final Thoughts
Anytime from Pre-Foreclosure until eviction, a Short Sale can be negotiated. A Short Sale is when the Lender agrees to take less than what is owed when the property is sold prior to the end of the Redemption Period. Short Sales are a long tedious process in which you should have a qualified Real Estate Professional with experience handling the negotiations with the Lender. I have successfully negotiated several Short Sales, which in turn remove any obligations from the Homeowner for Deficiency, the difference from what was owed to the agreed amount. Also a successfully negotiated Short Sale can also keep a dreaded Foreclosure off your Credit. If you have any questions, or are interested in Listing your property and negotiating a Short Sale, please contact me @ 616-855-1905 or email me @ danielsundberg@comcast.net
Copyright 2007 Daniel Sundberg, Five Star Real Estate All Rights Reserved
