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|MORTGAGE COMPANIES HAVE TO TALK TO YOU!|
Your Rights During a ForeclosureNationwide, mortgage companies are foreclosing like never before. That’s not news. But what you may not know is that Michigan has a helping law: before a mortgage company forecloses a home through the typical advertising process, it must give the homeowner the chance to work out something. The law forces a face-to-face meeting with the lender or lender’s agent to work on mitigating a homeowner’s losses by avoiding foreclosure altogether with a new, better, maybe lower interest, maybe lower payment, maybe postponed principal payment, loan. With Michigan’s foreclosure rate in the top 10% according to the Detroit Free Press, it is a welcome law.
The Michigan legislature made this a mandatory step before a mortgage company forecloses, on July 5, 2009. The process is 5-Step. First, the mortgage company must send a Notice to the homeowner by regular mail and also by restricted delivery mail. The Notice itself has very specific requirements. Basically, the homeowner gets directions on what to do. Note that the mortgage company can gets its hand slapped in a foreclosure proceeding if it doesn’t send a compliant Notice.
Second, the mortgage company must publish a second Notice within 7 days of mailing the first Notice. In Montcalm County look for those published notices in the Greenville Daily News. In Mecosta County, look in the Pioneer. In Newaygo County, read the Fremont paper. I advise my clients to look in the River Valley Shopper as well, but my experience tells me that should be your second choice.
Third, the homeowner gets 14 days from the date the Notice was mailed to opt into the program by requesting a face-to-face meeting with a housing counselor. It is the homeowner’s responsibility to contact a housing counselor by calling or visiting the website of the Michigan State Housing Development Authority’s website. The State Housing Authority and other counselor’s telephone numbers are posted in the mailed Notice, and in the published Notice.
There’s no reason not to call and request a housing counselor. Once the call is placed, foreclosure proceedings are not allowed to commence until 90 days after the date the Notice was mailed to the borrower. This is an excellent way to buy time to plan your next steps. And, it might result in a better mortgage.
The fourth step is the meeting and ‘Work Out’. The meeting must be held at a time and place convenient for everybody or in the county where the property is located. The meeting is the time to work together on whether the homeowner is eligible for a better mortgage modification. If so, this is the chance to avoid foreclosure under a workable, manageable, new ‘deal.’ And, if the homeowner is not eligible, the 90 period has to elapse before foreclosure proceedings may commence. This could buy you time to find a co-signer, or a new job, or a roommate!
The work out process uses a test based on the Federal Home Affordable Modification Plan – which means the mortgage company cannot just make whatever rules it wants. It has rules to abide by. Without boring you with the math, the test uses the homeowner’s gross income information and housing-related expenses. Be prepared to provide that information.
Lastly, if the math works out, the statute says the mortgage could be modified in several ways to benefit the homeowner. For example, late fees might be eliminated or reduced. A portion of the unpaid principal could be deferred until sale of the property. The loan could be extended out as far as 40 years, which would greatly reduce the monthly payments. The interest rate could drop down to as little as 3% for 5 years, fixed. There are other good options. And there is nothing to say you can’t try to persuade the mortgage company to be even more considerate. After all, it doesn’t want to own a house it can’t sell, so you might be its best bet!
This is good legislation. Thanks go to the Governor and both sides of the Legislature. If you’re a homeowner, this is your chance to save your investment.
Jeanne L. Jerow. Estate Planning Certificate Holder, Divorce & Family Lawyer. Howard City. 888-622-8622
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