Is There Foreclosure Help in Michigan?
Each state has the authority to govern the foreclosure process for properties located within its boundaries. Because of the increase in foreclosure rates starting in 2008, many states have also developed laws concerning foreclosure prevention. Michigan requires lenders to work with borrowers before initiating the foreclosure process. Borrowers in fear of foreclosure should familiarize themselves with Michigan foreclosure laws and foreclosure prevention programs.
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Foreclosure Process
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Michigan foreclosures can proceed judicially or nonjudicially; nonjudicial foreclosures are most common. With this type of foreclosure, the lender required that the borrowers sign a security document at the time the loan was originated. This security document contained a clause stating that the lender could sell the property for the unpaid loan balance if the borrowers were to default on the loan payment. Generally, the lender appoints a trustee to handle this situation. In Michigan, nonjudicial foreclosures can be completed in around 90 days. After the property is sold at the foreclosure auction, the previous borrowers are generally awarded a redemption period to repay the lender and regain ownership of the property.
Foreclosure Prevention
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The Michigan State Housing Development Authority recommends that the best way to avoid foreclosure is for you to communicate with the lender. The lender may be more willing to offer assistance if you communicate that you are having financial difficultly. If the lender has sent you mail regarding the status of your loan, open it immediately. In Michigan, you have 14 days to contact a credit counselor after the lender sends a warning or notice. Also, be aware of foreclosure counseling scams. In Michigan, foreclosure counseling assistance is available for free. Borrowers should never pay for these services.
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Programs
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Michigan has several state programs for foreclosure prevention. The MSDHA has created the "Save The Dream" program. Through the website, borrowers can find valuable resources for foreclosure assistance and prevention. The Michigan Foreclosure Prevention Project offers free legal aid counselors to borrowers in fear of foreclosure. The project's website offers a list of available counselors in regional areas. Once you are set up with a counselor in this program, you will have 90 days to work out a new loan agreement with the lender.
Loan Programs
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If the lender is willing to work with you to prevent foreclosure, a loan modification or refinance can help. Both of these programs can extend the term of the loan and lower monthly payments, making it more affordable. The main difference in these programs is that the modification program changes the terms of the existing loan, while the refinance is a completely new loan. The new loan pays off the old loan and has a new set of terms.
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