| Steps to a Foreclosure
Michigan is currently leading the nation in foreclosures. I frequently am asked, "What are the steps mortgage companies take during foreclosures? What should I expect
next?" I thought I would provide the following timeline when house payments are not made.
- After 16 days the mortgage company charges a late fee. The amount varies, but can be as much as $75.00 or more.
- After 30 days the first derogatory report is given by your mortgage company to a credit-reporting bureau. This affects your credit score and makes it harder to obtain credit or low interest rate loans.
- After two (2) months of being behind a mortgage company will assess a new late fee, some mortgage companies will not except 1-month payment but demand 2 months be paid at the same time.
- Three (3) to Four (4) months behind, most mortgage companies will demand all 3 or 4 months payment made at once. Foreclosure process begins, attorney fees and costs are added to late fees and payment.
To stop the foreclosure process some mortgage companies will allow the late payments to be added on the end of the mortgage, contact your mortgage company. Some will accept a deed to the property in lieu of foreclosure. This has the advantage of saving a mortgage company the cost of foreclosure and gives you the benefit of not being charged any deficiently if the home is eventually sold for less than what is owed. Another option to stop a foreclosure is a bankruptcy. This has to be filed before the foreclosure sale takes place.
- Four (4) to Five (5) months behind, a foreclosure sale takes place at the county courthouse, usually with the mortgage company buying the property for the amount owed. The homeowner however sill has a six (6) month right of redemption. During this time period the homeowner may redeem the property, or sell, for the full amount owed on the mortgage, plus late fees and attorney fees. Finally after the 6 months the redemption period has expired, if the homeowner is still living on the home the mortgage company can start an eviction process in district court to evict the homeowner, much the same as a landlord tenant proceeding.
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