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The Foreclosure Process in Southeast Michigan

Many of the numbers the media likes to spout about homes going into foreclosure are a bit exaggerated. When you read about the number of homes in foreclosure the stats often quoted are the notices of foreclosure that have been served- not the new bank owned listings. There are also companies like Realty Trac that publish specific houses as foreclosed homes. And technically while that that may be true, those houses are not for sale and may never come up for sale.

Below is my attempt to dispell the myths floating around about foreclosures and explain as simply as possible how the foreclosure process works in Southeast Michigan.

Typically a person needs to be behind on their house payment by 3 months or more before they receive a notice of foreclosure. That notice of foreclosure will have a date for the sheriff’s sale– usually a couple months off. The bank (or first lien holder if there are multiple loans on a house) will buy the house back at the sheriff’s sale for the amount of the mortgage or fair market value or someplace in between.

After the sheriff’s sale the owner has what is called a redemption period to pay off their mortgage(s). Most homes will have a 6 month redemption period. Homes on 3 plus acres will have a year to redeem. During this entire time the owner still has full rights of use and has the ability to sell. But the media will still call these homes bank owned or “in foreclosure” during this period.

Many of these homes will never go back to the bank. Some people will catch up before it ever gets to the sheriff’s sale. Some will sell during that time; some people still do have equity in their homes and others may be willing and able to bring cash to the closing. Others will sell via the short sale route. Many times a lender will delay the sheriff’s sale if the owner is in the process of a short sale. Some will even extend the redemption period if necessary rather than take the house back and sell as an REO (bank owned) property.

I’m finding that the amount of true bank owned sales in North Oakland County are on the decline and a major increase in short sale closings. For very detailed sales statics please click the links below for very dry and for many boring sales data for Lake Orion, Oxford and Clarkston Michigan.

Lake Orion Michigan sales data

Oxford Michigan sales data

Clarkston Michigan sales data

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Attention Southeast Michigan Home Owner! Behind on Your House Payments? You MUST Read This!

I read about this on another blog, written by a real estate agent from another area. So I decided to follow the link from his post to the US Department of the Treasury, Comptroller of the Currency Administrator of National Banks to verify. And sure enough- his post was accurate!

If your mortgage and your checking account are with the same bank, and you are behind on your mortgage, the bank can takesoutheast michigan short sale home information oakland county michigan lapeer county michigan the payment from your checking account to pay your house payment. Without asking your permission or even notifying you! It is called the Right of Offset.

The agent whose post I read last night was relaying a story about a client who was going through a short sale and their bank drained their checking account shortly before approving the short sale. Soooo- if you’re going through a short sale or foreclosure in Southeast Michigan, you may want to consider moving your accounts if they are with the same bank that owns/services your mortgage.

For more detailed information, go to the US Department of the Treasury web site.

Jackie Hawley
Keller Williams Realty
Jackie@JackieHawley.com
cell: (248)736-6407
web:
www.MiRelocation.com
buyer blog: http://SoutheastMichiganRealEstate.wordpress.com

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oakland county michigan short sale real estate

Just sit right back and you’ll hear a tale, a tale of a fateful decision made by a lovely lady named Carol in the year of 2010. You see, Carol had bought her house in Lake Orion, Michigan a few years earlier, when home prices were at their peak. A nice home with plenty of space for her growing daughters, great neighborhood, terrific school district. 

Many of her neighbors bought in this beauty wood around the same time Carol did; original owners who had a lot of equity cashing in and upgrading to little mansions. Many of the original owners who chose to stay re-financed and pulled equity out of their houses to finish their basements, enlarge decks, update their kitchens and baths (Doesn’t everybody have granite now ‘days?) – which was all great for Carol. The more her neighbors did to improve their homes the more her house was worth!

Today- July 14, 2010, Carol was chatting with her neighbors, Elvieny and Lukey, as they were breaking the news- they were putting their house up for sale.

Carol- “Can you afford to sell? You paid at least what I paid.”

Elvieny- “We’re doing a short sale. We’re at least a hundred and fifty thousand upside down.”

Carol- “I thought you needed a hardship. Did one of you lose your job?”

Elvieny- “It’s called a strategic short sale. Heck- the Simpsons and the Rubbles both lost their houses and the banks dumped them for almost nothing. The Bunkers and the Jeffersons are both short selling. There are a few others that have gone back to the banks- you can tell by the way the yards aren’t maintained. We’re sitting here just watching the value draining from our house. It’s time to cut bait. We can rent for a couple years then buy a nicer house for half what we owe on this one. We don’t have a choice.”

Carol- “You have a choice! You can afford your house payment! What you’re doing is not right!”

Fast forward to 2015. Carol is still in her lovely home. The “new” neighbors, George and Jane and their lovely kids Elroy and Judy are over for dinner. George is thrilled at the interest rate he’s getting on the equity loan he’s taking to send Judy to college. Carol’s jaw hits the floor. She’s still an easy hundred grand upside down on her mortgage and paying close to a full per cent more for her mortgage! Her daughters are all going to have to get student loans because she has no equity to pull from her house to help them. Hell! She’s even going to have to put off retiring for 5 years because she can’t afford to sell. Or even refinance for that matter!

So much for doing the right thing! For taking the moral high road!

And what ever happened to Elvieny and Lukey? After renting in the same neighborhood for three years (at half their old payment) they loaded up the truck and moved to Beverly! Hills that is! Oakland County! Michigan!

Oakland and Lapeer County Michigan home owners. If you want information about selling via short sale (strategic or not), please don’t hesitate to contact me. I promise you I will not pass judgment!

Jackie Hawley
Keller Williams Realty, Clarkston
Cell: (248)736-6407
Email: Jackie@JackieHawley.com
Web: www.MiRelocation.com

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Attention Oakland and Lapeer County Home Owners!

Recently Fannie Mae announced new, increased penalties for so called “strategic defaulters.” Fannie Mae is defining a strategic defaulter as “Defaulting borrowers who walk away and had the capacity to pay or did not complete a workout alternative in good faith.”

The new penalties: the time frame was extended to 7 years before getting another Fannie Mae backed loan. Go to the seller page of my web site for the chart. Remember- this is for Fannie Mae backed mortgages. FHA still has a much shorter waiting period.

New penalty number 2: straight from the Fannie Mae web site- “Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgements.” Michigan is a state that allows for this.

The problem with these new rules/announcements? Who is to determine who has the “capacity to pay?” And who determines what exactly constitutes “extenuating circumstances?” And who knows how the definition of “capacity to pay” or “extenuating circumstances” will change over the years?

If you owe more on your mortgage than your house is worth, and you want/need to move, you really should consult with a good, experienced attorney to discuss all your options and their potential consequences. For some the best course of action may be a short sale or deed in lieu of foreclosure. For some the best course of action will be to allow the bank to foreclose and file for bankruptcy protection. For others the best thing is a mortgage modification.

Since everybody’s circumstances are different there is no definite “option A is the best option for all.” You should talk an attorney, and possibly your financial planner and accountant and then make a decision about what the best course of action is for you and your family.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email: Jackie@JackieHawley.com
web: www.MiRelocation.com  

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I’m no Bill Shakespeare, but the question about whether selling via the short sale route is the best thing for you is a legitimate question. Often times this is a question that cannot be answered by a real estate agent.

Basically a short sale is when a person sells a piece of real estate for less than the balance owed on the mortgage, and the seller can’t or won’t pay the difference. For the purposes of this blog I am going to write about home sales – vacant land and commercial sales is a whole other animal.

When making the decision about whether or not to short sell your house there is a lot to consider. Do you need to sell? How much underwater are you? What do you have in the way of other assets? And depending on the answers to these questions, you may need the advise of your accountant, attorney and/or financial planner.

Some quick facts:

  • In Michigan the lien holders can sue for the deficiency after a foreclosure or short sale
  • You can negotiate away the liability for the deficiency in a short sale- you may have to bring money to the closing or you may be required to sign a promissory note for a percentage of the deficiency
  • Your credit is going to be screwed whether you go through a foreclosure, short sale or deed in lieu of foreclosure
  • You don’t need to be destitute to get a short sale approved- strategic short sales can and do happen all the time
  • A real estate agent can give you good advise, but the decision about whether or not a short sale is the best route for you requires a look at your overall financial situation including any investments, retirement, upcoming bankruptcy, change in income…..

I will be writing about short sales from the seller perspective in more detail in the very near future. If you want or need to sell and are upside down on your mortgage, please contact me for real estate advise. That would be your first step since a good market analysis will let you know how upside down you are. Often times a short sale is the best option but sometimes you may be better off working with an attorney and doing what is called a deed in lieu of foreclosure. Sometimes the best thing is to live in the house for free while it goes through the foreclosure process.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email: Jackie@JackieHawley.com
web: www.MiRelocation.com

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