Are you walking away from a home that has equity?
Logically you may assume homeowner’s walk away from homes that are “under water” or do not have any equity, but that may not be the situation, here’s why. When a property is sold at Sheriff Sale, they set a redemption amount that is required to be paid to redeem or keep the property. However, most homeowner’s assume that this is the same amount as the mortgage amount, and in some cases it is a similar amount, but I continually see numerous times where the redemption amount is far less than the mortgage balance.
Real life foreclosure equity example: Transaction numbers are rounded for simplicity. Mortgage balance is $200,000, the owner had a divorce and the property was only worth $180,000 at the time, and decided to let it go to foreclosure. Unaware of the Sheriff sale redemption process, the owner asked to research the redemption amount. We found that the redemption amount was set at $85,000! At this point the house needed a little work, but we listed it for sale and sold for $165,000. After real estate taxes, commissions, redemption fees, etc., the owner walked away with a check for a little over $65,000!
This is usually why homeowner’s in foreclosure are getting bombarded with investor calls, because they want to grab that equity!
I can quickly check your situation and let you know what Options you have for FREE! Just fill out the form below to get started, and I can research your situation and usually give you a call within 1-2 business days.
If you are unfamiliar with foreclosure process, specifically Michigan Foreclosure, there is additional information below.
Foreclosure Overview
Foreclosure is a legal process in which a lender or mortgage holder reclaims a property from a borrower who has failed to make their mortgage payments. The most common reasons for home foreclosure include:
- Failure to make mortgage payments: The most common reason for foreclosure is the borrower’s inability to keep up with their mortgage payments. When borrowers fall behind on their payments, the lender can begin the foreclosure process.
- Job loss or reduced income: When borrowers lose their job or experience a reduction in income, they may struggle to make their mortgage payments, leading to foreclosure.
- Excessive debt: Borrowers with high levels of debt may find it difficult to keep up with their mortgage payments. This can be especially true if they have adjustable-rate mortgages that are subject to interest rate increases.
- Divorce or separation: Divorce or separation can lead to financial instability, making it difficult for one or both parties to keep up with mortgage payments.
- Illness or disability: Serious illness or disability can prevent borrowers from being able to work and earn the income necessary to make their mortgage payments.
Foreclosure Options
If you are facing foreclosure, there are several options that may be available to you. These options include:
- Loan modification: You may be able to negotiate a modification of your existing loan with your lender. This could involve reducing your interest rate, extending the term of your loan, or adjusting your monthly payments to make them more affordable.
- Refinance: Refinancing your mortgage can provide you with a new loan with better terms and a lower interest rate, which could make your payments more manageable.
- Forbearance: If you are experiencing a temporary financial hardship, your lender may be willing to grant you a forbearance, which would allow you to temporarily suspend your mortgage payments or make reduced payments.
- Short sale: If you owe more on your mortgage than your property is worth, you may be able to sell your home for less than the outstanding balance on your mortgage. This is known as a short sale, and it can allow you to avoid foreclosure and minimize the impact on your credit score.
- Deed in lieu of foreclosure: With a deed in lieu of foreclosure, you would voluntarily transfer ownership of your property to your lender in exchange for being released from your mortgage obligation.
- Bankruptcy: Filing for bankruptcy can provide you with legal protection from foreclosure and may allow you to reorganize your debts to make your mortgage payments more affordable.
It is important to speak with a housing counselor or an attorney who specializes in foreclosure prevention to determine which option may be best for your specific situation.
Michigan Foreclosure Timeline
If you can’t make your mortgage payments, explore your options. When the loan is 120 days late, the loan will usually enter the foreclosure process.
” Day 121: If all attempts to resolve default are unsuccessful and a hardship application is not received, the foreclosure process begins. The Sheriff’s sale date is scheduled and then published in the county newspaper for four (4) consecutive weeks with details of the debt. Notice of the sale date gets posted on the property within two (2) weeks of the first publication.
Sheriff Sale Held: The “Sheriff’s Deed” lists the last date the property can be redeemed. Up until the Sheriff Sale has occurred, the homeowner may still submit a loss mitigation application.
Six (6) months: The Redemption Period starts day of Sheriff Sale – Six (6) months is most common. If the amount claimed to be due on the mortgage at the date of foreclosure is less than 2/3 of the original indebtedness, the redemption period is 12 months. Farming property can be up to twelve (12) months.
The homeowner can live in the property, is not required to make payments, can sell or buy back property and should – *maintain the property – *maintain utilities – *maintain insurance. The homeowner must allow the purchaser to inspect the home and all structures during the redemption period.
To redeem the property the borrower must pay the amount bid at the sheriff sale plus interest and fees.
Redemption Period Expires: Home Inspections: If an inspection is unreasonably refused or if damage to the property is imminent or has occurred, the purchaser of the property at the Sheriff Sale may immediately begin eviction proceedings to seek possession and terminate the homeowner’s redemption period. Once you move out, the purchaser (normally the lender) may take action to gain possession of the abandoned property.
EVICTION: At the end of the redemption period if you have not already vacated the home you will receive a Summons to appear in court. At the hearing, a date is set for the Sheriff to physically remove you from the property, if necessary.” – Credit/Resource: Michigan.gov/MSHDA
Most homeowner’s walk away from their home in foreclosure at Sheriff Sale, and don’t realize they have a redemption period to stay in the home for a time period to figure out a solution. Call Severin for Options!!
Avoid Rescue Scams: Don’t give someone money who says they can prevent a foreclosure or help you get a loan modification. Don’t sign paperwork you aren’t familiar with or sign a deed over to someone who says they will help you.