Foreclosure is the procedure through which the lender in a mortgage takes ownership and/or possession of the property that secured the original loan. This happens when a debtor in East Lansing, Michigan has consistently failed to make their payments. Foreclosure usually results in the property being sold in an auction. Banks usually want to get rid of the property as soon as possible, even if it means taking a financial hit, and an auction is the simplest way to do this.
In every state, including Michigan, borrowers have the option to go through foreclosure by judicial sale. This means that the auction will be supervised by a court, to make sure that the bank makes an effort to get as high a price as possible (to increase the chances that the whole balance will be covered, as well as the odds that there will be some money leftover for the debtor). In numerous states, original mortgages (as opposed to refinanced loans) are "non-recourse" loans, meaning that the most the lender can collect is whatever the foreclosed property sells for. The bank cannot go after the debtor for the balance, if the sale nets less than the amount due. You should consult an attorney in East Lansing, Michigan to learn the details of the law here. You should also know that this rarely applies to loans that have been refinanced.
How Can I Avoid Foreclosure in Michigan?
First and foremost, you should not dismiss the possibility of foreclosure. Failing to respond to collection calls from your lender will not make the problem go away. As unpleasant as this may seem, you should stay in contact with your creditor, and be honest with them. You should remember that banks in East Lansing don't want your house. While the foreclosure process can be devastating for the homeowner, it's no walk in the park for the bank, either. They expected to make a profit through interest on the loan paid over time, and foreclosure is a last resort, allowing them to cut their losses and move on. If you are honest with them, lenders will usually try to accommodate your changed financial situation, to avoid a default on your part, and the necessity of foreclosing on their part.
If you believe that foreclosure is imminent, there are some other avenues. For example, you may be able to engage in a "short sale," which sometimes allows you to sell your house for whatever amount you can receive, give the proceeds to the lender, and walk away free of your mortgage debt, even if the sale netted less than the balance of the mortgage. There is also the option of a "short refinance," which forgives a significant portion of your mortgage debt, and refinances the rest.
How Can A East Lansing, Michigan Attorney Help?
If you are facing the possibility of foreclosure, a good East Lansing, Michigan real estate lawyer can help. At the very least, they will be able to inform you of your legal options.