Friday, March 7, 2008

Mortgage Foreclosure Timeline

First Month Missed Payment: The first month that your payment is missed, your mortgage company is likely to contact you by mail and/or telephone to inform you of your delinquent status. A late charge is assessed on your missed payment.

Second Month Missed Payment: The second month that your payment is missed, your mortgage company is likely to begin calling the contact numbers that they have for you, in order to discuss why you have not made a payment. It is important that you not avoid their telephone calls. Try to stay calm on the phone, explain to them your situation, and what you are doing 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 from the mortgage company stating the amount that 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 arrangement 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 than the total amount due without prior arrangements. Foreclosure/Acceleration 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: Now you are usually nearing the end of the time allowed in your Demand Letter or Notice to Accelerate. If this expires and you have not paid the full amount, or worked out some arrangements, then you will be referred to their Attorneys. At this time, you incur all Attorney fees as part of your delinquency. The Attorney then schedules a “Sheriff’s Sale”, which is the actual date of foreclosure. The Sheriff’s Sale will be scheduled for approximately six weeks after the Attorney receives your file. You will be notified of this date by mail, along with a notice taped to your door. This is NOT a move-out date. The Attorney publishes a notice of foreclosure over four successive weeks in the local legal newspaper. After the first insertion on your property is published in the legal news, you have 4 weeks until the Sheriff’s Sale. Contact your lender NOW!

Sheriff’s Sale: You have up until the date of the Sheriff’s Sale to work out arrangements with the mortgage company or to pay the total amount owed (the reinstatement amount). At the Sheriff’s Sale, your house will be sold. An outside party may bid on your home. If no bids are received, the home goes back to the lender.

Redemption Period: If nothing is done to resolve the situation and the Sheriff’s Sale is completed, then you enter the Redemption period. The redemption period starts from the date of the Sheriff’s Sale. State law in Michigan requires that this period is not less than 30 days, and no more than one year. Most mortgages allow the homeowner six months to redeem the property with the lender/bidder, paying the amount owed plus interest and fees. If the property is over 3 acres, you may have a 12-month redemption period. You will be notified of your time frame on the same notice that states your Sheriff’s Sale date. This is still your time to reside in the home.

End of Redemption Period: If the homeowner has not redeemed the property, ownership is transferred to the lender or bidder. If the homeowner has not left, the new owner starts the eviction proceedings. An eviction hearing is held within two weeks, followed by a 10-day grace period for the former homeowner to vacate the premises. When the grace period ends, eviction is certified. Court bailiffs are notified, and they empty the premises. Any of your belongings remaining in the home are moved to the curb for disposal. The locks are changed, and you no longer may reside there.

4 comments:

Sean Purcell said...

Vance,
This is probably the clearest explanation I have ever read. During a very tough time, easy to understand info is a blessing to everyone who needs it. Thanks!

Vance Shutes said...

Sean,

You're too kind. Thank you.

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