Here is a list of frequently asked questions to help clarify common concerns. If your question isn’t answered here, you can use the comment box at the bottom of this page to post a new one. Alternatively, you can contact us at firstname.lastname@example.org.
Q1) Where am I in the foreclosure timeline?
Month One Missed Mortgage Payment: The first month that you fail to pay your mortgage payment, your mortgage company will try and contact you, usually by mail, to inform you that you are delinquent on your mortgage. The mortgage company will charge you a late fee on this missed first month mortgage payment. It is very important that you speak to your mortgage company and honestly explain your financial situation. Make certain that you tell your mortgage company when you believe that you can make your missed mortgage payment.
Month Two Missed Mortgage Payment: The second month that you fail to pay your mortgage payment, your mortgage company will try and contact you by any means, including mail and telephone, to find out why you missed your first and second months mortgage payments.. Do not avoid your mortgage company’s calls. In fact, it is best to initiate the call to your mortgage company to explain the reason for your missed mortgage payments. Your mortgage company will be more likely to work with you in the future as your situation progresses. When you speak to your mortgage company, ask for the loss mitigation department. When you speak with the loss mitigation department of your mortgage company be honest, respectful and calm on the telephone and explain to them your situation and what you are trying to do to resolve your financial issues. If at all possible, offer to make one mortgage payment at this time to prevent yourself from falling three months delinquent and potentially into mortgage foreclosure.
Month Three Missed Mortgage Payment: The third month that you fail to pay your mortgage payment, you will probably receive a letter known as the “demand letter” or “notice of acceleration” from your mortgage company telling you that you are delinquent on your mortgage, the total amount that you owe and that you have 30 days to pay that amount (“Acceleration Period”). You have two options before that 30 day period runs, you can pay the amount specified in the demand letter or make an agreement with your mortgage company about how and when you will pay the delinquency amount. If you fail to pay the entire amount owed or make an agreement with your mortgage company about how you intend to pay that amount, then your mortgage company is allowed at that time to put you in foreclosure or accelerate your mortgage. They are unlikely to accept less than the total amount due. The foreclosure or acceleration letter will tell you that your mortgage company forwarded your delinquent mortgage account to their attorneys. Even at this point, you may still be able to negotiate with your mortgage company to retain your home if you have the budget to do so. At this point, it is important that you contact your mortgage company to try and work out a deal for you to either keep your home or enter into a dignified exit of your home on fair and reasonable terms.
Month Four Missed Mortgage Payment: The fourth month that you fail to pay your mortgage payment, you will be at the end of the Acceleration Period. If you have not come current on your mortgage payments or complied with any agreements that you have worked out with your mortgage company when the Acceleration Period ends, your mortgage company is entitled to take steps to foreclosure on your mortgage. If your mortgage company begins mortgage foreclosure against your home, you will be responsible for all back mortgage payments, interest and penalties related to the mortgage, as well as all attorney fees and these must be paid in full in order to reinstate your mortgage.
Sheriff’s Sale: If your mortgage company has not received all amount due and/or you have not entered into an agreement with your mortgage company, a Sheriff’s Sale may be scheduled and that becomes the date of foreclosure.. You will be notified by mail of the foreclosure date/sheriff’s sale prior to that date. In addition to the mailed notice of sheriff’s sale/foreclosure date, a notice will be taped to your home, usually on the front door.
For four (4) consecutive weeks prior to the Sheriff’s sale/foreclosure date, your mortgage company will publish the notice of foreclosure against your home in a local legal newspaper with general circulation. At this point, it is important that you or one of our experienced and skilled housing counselors contact your mortgage company to try and work out a deal for you to either keep your home or enter into a dignified exit of your home on fair and reasonable terms.
If you fail to pay the amount necessary to reinstate your mortgage or work out a deal with your mortgage company, the Sheriff’s sale will go forward and your home will be sold to the highest bidder. If no bids are made on your home, the title to your home goes to your mortgage company. This is known as the Sheriff’s Deed. Even at this point, you still have rights to your home. YOU DO NOT HAVE TO MOVE OUT OF YOUR HOME AT THAT TIME.
Redemption Period: If you fail to resolve the situation with your mortgage company; 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 and in the greatest number of cases, ends six (6) months after the sheriff’s sale. Most mortgages allow the homeowner six (6) months to redeem their home with their mortgage company/bidder, by paying the amount owed on the mortgage, plus interest and fees. If property that your home sits on is over 3 acres, you may have a twelve (12) month redemption period. You will be notified of your time frame on the same notice that notifies you of your Sheriff’s Sale date. IT IS IMPORTANT TO NOTE THAT YOU HAVE AT LEAST SIX (6) MONTHS TO STAY IN YOUR HOME AFTER THE SHERIFF’S SALE.
Eviction Period: : If you have not redeemed your home within the redemption period, ownership of the home is transferred to your mortgage company or the highest bidder. At this point, if you have not left the home, the new owner starts eviction proceedings to evict you from the home. An eviction hearing is held within two weeks, followed by a 10-day grace period for you to leave the home. When the grace period ends, the eviction is certified. Court bailiffs or County Sheriffs are notified and empty the home.
Q2) Can I still keep my home if I am in foreclosure?
“Loss mitigation” is the term used by mortgage companies to describe their programs and department that can assist borrowers in negotiating to resolve their mortgage situations. If you find that you have a financial hardship or difficulty paying your mortgage, this is the department that you must insist on working with. The number one requirement of Loss Mitigation is affordability of the mortgage. To be able to assist you, the mortgage company must see a budget that demonstrates to them that the income coming into your home is sufficient to support all of the household bills. When speaking to your mortgage company, ask to speak to their Loss Mitigation Department, which is sometimes called the Loan Counseling Department. These are the people that have the authority and knowledge to assist you with resolving your issues on your mortgage. The first thing that you need to do is request a loss mitigation package for your loan from them. Find out what type of loan you have (i.e. Freddie Mac, Fannie Mae, VA, or FHA). This will help to determine how easily your mortgage case can be resolved. When you contact your mortgage company, ask them who the investor is on your loan, or if you have mortgage insurance.
Options You May Have
- Repayment Plan: This is when the mortgage company can take the amount that you are delinquent and add it on to your regular payment, and spread it out over 3-12 months. (Some mortgage companies will allow longer.)
- Loan Modification: This is when the mortgage company adds the amount that you are delinquent to the principal balance of your loan. If they think that it is necessary, then they may consider extending your loan term to 30 years and/or adjust your interest rate.
- Partial Claim: This strategy is used on FHA loans or those with PMI insurance only. This is when the insurer of your mortgage gives you a loan for the amount that you are delinquent. This is a non-interest loan that does not require payment until the sale of the home or until you pay off the first mortgage.
Q3) What options do I have if I know I cannot keep my home?
There are different options available to you when you no longer have enough income in the household to support the mortgage and all other bills. These options assist with preventing the foreclosure, but do not mean keeping the home.
The mortgage company allows the homeowner the sell the home for less than what is owed on it. This option can be utilized before the Sheriff’s Sale. Prior arrangements need to be made with the mortgage company before the official sale of the home.
The mortgage company allows you to give back the deed to the home in exchange for “forgiveness” of the debt. This must be done before the Sheriff’s Sale. The mortgage company may require you to have the home listed on the market for a period of time before considering this option.
Sale of Home
List the home for sale. This can be done before or after the Sheriff’s Sale. However, to prevent the foreclosure from going on your record, the sale must be completed before the Sheriff’s Sale date. During this time, the best thing for you to do is to stay in contact with the mortgage company. This is important to prevent the foreclosure of your home, if at all possible. Unfortunately, it may not mean keeping your home, but will allow you to “spare” your credit, so that you may purchase a home in the future when your situation improves.
You have up until the date of a Sheriff’s Sale to “work out” arrangements with your mortgage company. So, if you can re-establish sufficient income before that date, then options that involve keeping your home become available to you. If this does occur, contact us.
Q4) What is a Sheriff’s Sale and what does it mean in my circumstance?
1. A Sheriff Sale occurs after 4 consecutive weeks of publication of the mortgage foreclosure in a newspaper of general circulation and posting of a notice of foreclosure on your home, usually on the front door.
2. You are not required to attend the Sheriff Sale on your home. The home is sold to the highest bidder and if there are no bids, to the mortgage company.
3. In most cases, the home is purchased by the mortgage company that holds the loan for the amount of the outstanding loan balance plus various fees and interest.
4. The purchaser receives a Sheriff’s Deed (Sheriff’s Deed on Mortgage Sale) but does not yet own the property. You still have redemption rights to your home, in most cases for six (6) months.
5. The purchaser records the Sheriff’s Deed with the County Register of Deeds. Once the sale occurs, the redemption period begins. You still have the right to remain in your home, in most cases, for six (6) months
Your Rights After Sheriff Sale
1. Even though a sheriff’s sale has occurred on your home and a Sheriff’s Deed issued, you still have rights to your home.
2. Most mortgage foreclosures give you a 6-month redemption period which usually begins on the date of the Sheriff’s Deed (if your property is large or you have a lot of equity, your redemption period may be longer). If you know you won’t be able to redeem your home, you can use this time to find new housing.
- For the entire six (6) month redemption period and as the captain of your financial destiny, you can make the decision that you will not pay anything to your mortgage company and; save your money for moving expenses and/or a rental deposit.
- No matter what your mortgage company or its attorney or property management company tries to tell you, you do not have to move out during the redemption period. If you do move early, your property can be declared “abandoned” and the redemption period can be shortened to as little as one month. If you get a notice of abandonment and you have not abandoned your home, be sure to respond quickly and in writing explaining that you have not abandoned your home.
3. You can “redeem” your home, meaning that you can get your home back by paying the full amount to the owner of the Sheriff’s Deed, usually your mortgage company. The amount due may change from the amount noted on the Sheriff’s Deed; so confirm with the owner of the Sheriff’s Deed the correct amount required to redeem your home. If you are able to redeem the Sheriff’s Deed, make sure that your redemption is recorded with the County Register of Deeds so that your ownership of your home is clear in the public record.
4. Another option is to try and sell your home during the redemption period. This option will be helpful if you have a lot of equity in your home (“equity” means the difference between the value of your home and the remaining amount of the loan). You must confirm with your mortgage company’s attorney or the owner of the Sheriff’s Deed the amount needed to pay off the debt. If you sell your home for more than is owed to your mortgage company, you will be entitled to that amount and it should be payable to you at the closing on your home.
5. At the end of your redemption period, if you have not already moved out, you will be served with eviction papers. A court hearing will be scheduled, usually within 10 to 20 days. You will then have an additional 10 days after the hearing date to move and remove your possessions (mortgage company attorneys will often give you more time if you ask). If you do not leave the home on or before the court-ordered date or the agreed upon date, a court officer will go to the home to remove you.
6. Once your redemption period ends, you no longer own your home. “Deficiency” means your home sold for less than was owed to your mortgage company and this difference between the amount of the Sheriff’s Deed and the amount that your former home sold for (plus additional costs). It is possible, but unlikely that your mortgage company will sue you for any deficiency. Being sued for a deficiency is somewhat more common with second mortgages or home equity loans. If this happens to you, you should contact an attorney to respond to the lawsuit. If you are unable to afford an attorney, find a free legal aid attorney in your area.
7. It is rare for a mortgage company to sue a borrower for a deficiency. Typically, the mortgage company will file an IRS form 1099 which treats the deficiency as income to you. You would then owe taxes on the deficiency. You can protest this with the IRS-contact an attorney, certified public accountant, or qualified tax preparer to assist you.
8. Unfortunately, there are many scam artists targeting people who are facing financial difficulties, including mortgage foreclosure. You should be very suspicious of anyone who contacts you offering to “help”. In most scams someone will contact you and offer to help save your house if you pay a fee. OUR SERVICES ARE FREE AND WE ARE HERE TO HELP YOU. Another scam is an offer to buy your home and allow you to stay on as “renters”. If you feel that you may be the victim of a scam, contacts the Michigan Attorney General’s Office and report this immediately.
Q5) What are the warning signs of a predatory lender?
Normally legitimate businesses do not advertise on utility poles or on temporary signs along the side of the road. Be suspicious of anyone who calls or stops by your home with an offer too good to be true. Offers that seem too good to be true are. Predatory buyers or scam artists may pretend to help you. What they really want is your home. You may be faced with a predatory lender if that person: Comes to you to “solve” your financial problems
- Pressures you to make a quick decision
- Demands big up-front fees
- Tells you not to contact your current mortgage company
- Tells you not to contact an attorney
- Asks you to sign papers without giving you a chance to read them
- Asks you to sign papers with blank spaces
- Asks you to sign a deed
- Offers to file bankruptcy for you
This information provided by the Wayne County Mortgage Foreclosure Prevention Program (www.fightmortgageforeclosure.com)