Help, we are facing foreclosure. Need Advice.

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Help, we are facing foreclosure. Need Advice.

Submitted by Gary64 on Wed, 04/09/2008 - 5:19pm.

I have two rental properties in michigan that are going through foreclosure and the bank is trying to repo my tractor but my tractor is on a seperate loan and is not behind in payments. We’ve tried to sell properties with three real estate companies. The crime rate in both areas have worsened. Our income has dropped so holding onto properties would be impossible considering all the negative factors. We’ve tried for three years and our taxes are behind on both properties and vandals have damaged and stolen necessities for living and running the household. We’re concerned about the process of foreclosure and all that follows.

Comments:

Submitted by admin on Wed, 04/09/2008 - 5:24pm.

Hello Gary, I’m not an Hello Gary, I’m not an expert in Michigan foreclosure law, and would advise that you speak to an attorney. What I do know: 1. Michigan offers both Judicial and Non-Judicial foreclosure, the rules are different for each process so your rights would depend on which process your bank has chosen. 2. Michigan offers a redemption period. This is a period of time AFTER the foreclosure has taken place during which you can pay the past due amount and reclaim the property. 3. Michigan does allow deficiency judgments in certain cases (a court order which allows the bank to collect from you the difference between the loan amount and what the property sold at auction for) - if the bank received a deficiency judgment against you they may be able to come after your wages and belongings, including your tractor. You really should consider talking to an attorney, especially if you rely on the tractor to make a living. First they can make sure the bank is acting under the law. Second they can help you determine if Bankruptcy is a viable option. Bankruptcy can potentially be used to wipe out the deficiency judgment, if any, and certainly be used to protect the tractor so long as you continue to make the payments on it. Best wishes.

Submitted by Jeff on Wed, 04/09/2008 - 5:32pm.

Sounds similar to my Sounds similar to my situation. I have an investment property in WV that I have been trying to sell for 3 years, and have reached a point where the condo fees and taxes, along with the meager income, make me ready to walk away. I’m concerned about a deficiency judgement, especially since all my other debts are current and I have money in the bank. It’s not that I can’t afford the property now, but at the current cash loss rate it’s going to bleed my savings dry, and I’d rather not wait until I HAVE to declare bankruptcy. What are my options if I deliberately default, and should I approach the mortgage holder (First Horizon) to ask for their leniency? It’s a subprime loan- interest only 5-year arm taken in 2004, and I do have $20,000 cash in the property from when we bought it in 2002.

Submitted by admin on Wed, 04/09/2008 - 5:39pm.

Jeff, A couple of thoughts Jeff, A couple of thoughts for you. Number one, the sooner you get the property sold, the better off you are likely to be (unless your area suddenly appreciates which is unlikely in the current environment). If you’ve been trying to sell for 3 years, you are either doing a terrible job marketing the property or, more likely, you simply have it priced too high. Two, while dropping the price to the point at which it will sell may seem impossible, the reality is that it is likely your best option. Given the ability to seek a deficiency judgment in your state, you are likely going to have to pay for the banks loss regardless. So the only question is whether you want control over the process, or whether you want to give it to the bank. Banks are not going to work as hard to get the best possible price as you are…so leaving it to them will likely mean a larger judgment against you. Three, if the best selling price you can get is not enough to cover the loan, and you can not make up the difference yourself, you still have a very good chance of getting the lender to agree to a short sale…and may even be able to negotiate their not seeking a deficiency judgment. To do this they will want proof that you made every attempt to get the best possible price, and some verification that you don’t have the money to make up the difference. Four, there is one potential ray of light… it seems that WV law does NOT allow a deficiency judgment if the purchase price at foreclosure auction is less than 3/4 fair market value. I’d be really careful with this, however, as it seems to me the bank has the upper hand in how the property is disposed of and therefore to some degree price received at auction. I’d strongly recommend speaking with an attorney that is an expert in foreclosures and deficiency judgments in your area. Lastly, unless you have other significant debt, or an issue like protecting a source of livelihood (like the tractor in the earlier post) I would work to avoid bankruptcy. With the changes in the bankruptcy laws it is no panacea and is likely to be more trouble than it is worth. Best of luck.