Loan Modification

What Is The New Michigan Foreclosure Law?

By Kurt O'Keefe, Detroit Consumer Attorney

Effective yesterday, homeowners can get a 90 day delay foreclosure delay after getting the foreclosure notice.

Some of the terms of the new Michigan foreclosure law are:

After the homeowner, (the law applies to principal residences only) gets the written notice:

1. meeting with a housing counselor, and

2.  meeting with the mortgage company

Then:

1.  if the homeowner meets certain financial requirements, and

2.  the mortgage company refuses to modify the loan,

3. the mortgage company MUST judicially foreclose, and cannot foreclose by the faster, less expensive foreclosure by advertisemet.

This is a huge change, in that in judicial foreclosure, the mortgage company must prove it owns the mortgage.

Who holds the note? has been successfully used as a defense to foreclosure in states that require judicial foreclosure, that is, foreclosure through a lawsuit in the courts.

Michigan allows foreclosure by advertisement, four consecutive weekly published notices, almost always in the Legal News, followed by a sale at auction held by the Sheriff for the county in which the propety is located.

The mortgage company has to prove nothing to foreclose by publication.

They can bid up to the amount owed on the mortgage, just by telling the Sheriff how much they are bidding.  Anyone else has to come up with the money.

In almost all foreclosures by advertisement, the mortgage company gets the property back, as no one submits a higher bid.

In court, the mortgage company has to file a complaint, alleging that it holds the note or mortgage, and has the right to foreclose.

With all the buying and selling of mortgages, it is often difficult to prove this, and the homeowner can win the foreclosure lawsuit.

Full post as published by Mortgage Law Network on July 06, 2009 (boomark / email).