What To Do If Bank Changed Locks Before A Foreclosure

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When banks initiate the foreclosure process for failure to make payments, they must follow specific requirements as outlined by the state in which the property is located. These requirements are guidelines that tell the bank what it has to do, when it has to do it and what it has to do to complete the step.

 

During the entire foreclosure process, the borrower still retains rights in all states. Banks can’t simply seize the home, evict the borrowers and sell the home to someone else whenever they want. They must follow the process the state outlines in its foreclosure rules and regulations.

 

There are times, though, when banks may try to fast-track the process so they can evict a borrower quickly to regain their asset and unload it to someone else. When this occurs, they may change the locks on the home to ensure that the borrower doesn’t have access to the property anymore.

 

But, what can you do if the bank has changed the locks before they’ve reached the proper stages of the foreclosure process? We’ll examine borrowers’ foreclosure rights in Michigan below.

 

Can the Bank Change Your Locks?

Eventually, the bank has the right to change the locks on your home during a foreclosure. But, in Michigan, this can’t happen until the borrower officially abandons the home. When this happens, the bank has the right to change your locks so that it can protect what’s now their asset.

 

A borrower can be determined to abandon the home three ways – if they choose to leave the property voluntarily, if they agree to a “Cash for Keys” deal, or if they’ve been evicted.

 

The first of those three options is simple to understand. It happens when you decide to leave the home on your own to find other housing. In this situation, the bank simply changes the locks to prevent unauthorized people from accessing it as they take control of it and try to sell it.

 

The other two options are a little more complicated.

 

Cash for Keys

In a “Cash for Keys” agreement, the bank will provide the borrower with cash in exchange for leaving the home before the redemption period has ended. This allows the bank to attempt to sell the home without having to wait the typical six-month redemption period before they can proceed, allows the new owner to take possession of the home after a sheriff’s sale and/or eliminates the need for a costly eviction process.

 

In exchange for this courtesy, the bank will pay the borrower an agreed-upon sum. The amount of money is usually negotiable on a case-by-case basis.  This money will help the borrower pay for the up-front moving costs, to find new housing, or pay for other expenses.

 

Eviction

If the bank and the homeowner can’t come to an agreement on abandoning the home, then the bank has the right to proceed with an eviction. In Michigan, this is an official court process that can’t even begin until the redemption period is over.

 

In order to evict a borrower from a home, the bank must file a complaint and summons with the local district court. If the home has been sold to a new owner at sheriff’s sale, then the new owner must file this paperwork with the court after the redemption period has expired.  If the eviction is filed during the redemption, then the eviction will be dismissed..

 

Once this happens, the borrower receives a notice that an eviction has been filed. It’ll include a timeline for when a hearing will take place, and when you must respond if you wish to. 

 

If a court were to order an eviction after the hearing, then the borrower typically has as many as 10 days to vacate the home. If there is a new owner of the home, you could always work out an arrangement for a longer period if you need to. 

 

Should you attempt to stay in the home beyond that date, the court can order the local sheriff to force the eviction and physically remove you and all your belongings.

 

When Can a Foreclosure Eviction Happen in Michigan?

 

In Michigan, an eviction as part of a foreclosure cannot proceed until after the redemption period has ended – and the redemption period won’t even start until after the home has been sold at a sheriff’s sale.

 

What’s more, a sheriff’s sale can’t even be scheduled until 120 days after the borrower first missed their payment. Even then, the sheriff’s sale date must be published for four weeks before it is held.

 

Here is the typical timeline for foreclosures in Michigan …

 

Days 1-120

Borrowers are considered delinquent on their payments if they miss their payment by one day. During the early stages following the delinquency, the bank will notify the borrower that they are late – with live contact – and provide options for making good.

 

On Day 45, the lender has to assign one contact point for the homeowner and also provide them a written notice that they’re delinquent on their mortgage, along with options for loss mitigation.

 

From that point until Day 121, borrowers are able to work with the lender to work out options for making up for the delinquency. 

 

Day 121-Four More Weeks

At Day 121, if the borrower and lender are unable to come to an agreement, the lender is able to start the foreclosure process. In Michigan, this can be done in two ways: either through foreclosure by advertisement or judicial foreclosure. 

 

Before the sale is allowed to be held, if foreclosure is being sought by advertisement, a notice must be published in a county newspaper for four weeks in a row. Notice of the sale also has to get posted on the property itself within two weeks of the first notice of publication.

 

Six More Months

After the sheriff’s sale has finished, the foreclosure enters what’s known as the Redemption Period. In most cases, this lasts six months in Michigan.

 

During this time, borrowers have various options depending on their situation.  Borrowers have the right to redeem the property by paying the entire amount paid at the foreclosure sale, plus interest and fees, to redeem the property. If they’re able to do so, they will take back ownership of the home.  The borrower also has the right to sell their home through a traditional sale such as the Multi-Listing Service to obtain fair market value for the home.  This can be risky as the borrower is limited on the time frame to actually sell the property.  Finally, if the borrower believes the foreclosure was done improperly they can file a suit and petition the court to set-aside the sale and force the lender to start over or workout an alternative resolution.

 

Only after all of this time has passed can the lender even begin the eviction process.

 

Work with an Experienced Law Firm if the Bank Has Changed the Locks

As you can see above, a bank can’t simply change the locks before a foreclosure in Michigan. They must follow set processes and procedures that will take months to complete. At the very least, it will take nearly 150 days from the time of the first missed payment for the bank to even hold a sheriff’s sale. Even then, the borrower will have six more months to redeem the property.

 

The lender can then only start the eviction process  after that point. Remember, the only time a bank can change the locks on a property in foreclosure is after the borrower has abandoned the home.

 

If the bank has changed your locks before they’re allowed to in a foreclosure, it’s important you work with an experienced law firm that can protect your rights. Babi Legal Group has more than 20 years of combined real estate experience, and can help you defend yourself against a bank that has changed the locks on you during foreclosure.


Contact us today to learn more. 

What Is Foreclosure Lis Pendens?

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The foreclosure process can take a while in most states. In Michigan, mortgage companies can’t even begin the foreclosure process until a borrower is at least 120 days past due on their payments. 

Even then, a sheriff’s sale can’t be held for at least four weeks after the foreclosure notice is posted on the home’s front door.

In other words, foreclosures don’t happen overnight, no matter what state you’re in. 

When a mortgage company intends to foreclose on a property, they need to make sure that their asset is protected in the meantime, and that the public also knows it’s happening. To do this, the lender will file either what’s known as a lis pendens or notice of default, depending on the type of foreclosure being pursued and what state you are in.

Here are some more details about what a lis pendens is and how it applies in foreclosures.

What Does Lis Pendens Mean in Foreclosure?

Lis pendens is a Latin phrase that essentially means “suit pending.” In this sense, it’s a public notice that lenders will initiate when they begin the foreclosure process.

The idea behind a lis pendens is to notify the public that there is a lawsuit pending on the property in question. It puts a mark on the property’s title so that it won’t be sold easily. 

By filing a lis pendens, a lender will be making it very difficult for the borrower to sell the home, since buyers typically aren’t interested in acquiring properties that have clouded or bad marks on the title.

Lis pendens are filed directly with the recorder’s office in the county in which the home is located, typically known as the register of deeds office. It’s a public record file that notifies anyone who wishes to research the title history and determine the condition of title on a property .

This type of document can actually be used in a number of situations in which there is a dispute on a property, including in divorces, when a will is being contested, when a contract is being disputed and when the homeowner hasn’t paid property taxes.

When is a Lis Pendens Filed in Foreclosures?

A lis pendens is typically filed in all judicial foreclosures. This type of process requires the lender to start the judicial foreclosure process by filing an official lawsuit with the county in which the property is located.  However, a lis pendens is not required to be filed when foreclosing by advertisement.

Along with the actual lawsuit, the lis pendens notice will be filed with the recorder’s office. The states that require lis pendens to be filed say that it must accompany the actual foreclosure complaint.

This is where a lis pendens in foreclosure differs from other disputes. In a divorce, for instance, a lis pendens is allowed to be filed on a property, but it’s not a requirement. 

Contained in a typical lis pendens is a full description of the property in question, as well as the described nature of the exact claim against it. 

In all, 22 states require judicial foreclosures and the lis pendens that go along with it. While Michigan does have judicial foreclosures, they are not very common. Instead, most foreclosures in the state of Michigan are non-judicial foreclosures by advertisement and require a notice with a slightly different name.

For non-judicial foreclosures, lenders have to record what’s known as a notice of default. This notice will take the place of a lis pendens, but serves a very similar purpose. It, too, is a notice that informs the public of pending action against a property, and it also has to be filed with the recorder’s office in the county in which the property is located.

Unlike a lis pendens, though, a notice of default will usually contain very specific information that outlines the details about the loan that’s in default.

Once the notice of default or lis pendens is filed, the property in question is considered to be in what’s called the pre-foreclosure phase. This phase will last until that property is finally sold.

Details of Lis Pendens and Foreclosure in Michigan

As mentioned before, a lis pendens or notice of default can’t be filed by the lender until the borrower is at least 120 days behind on their monthly mortgage payment. Up until that time, the lender is required to take certain steps to notify the borrower of the missed payment and options for making it right.

The first written notification of delinquency happens on Day 45 after the missed payment, at which time the lender has to assign the homeowner a single point of contact for the case, as well as their options for loss mitigation. 

Once Day 121 hits, the lender is free to file the lis pendens (in judicial foreclosures) or notice of default (in non-judicial foreclosures).

From that point, a Sheriff’s Sale will be held to sell the property to the highest bidder. However, this cannot occur until public notice of the upcoming Sheriff’s Sale has been advertised weekly for four weeks leading up to the date of the sale.

Even after the property is sold at Sheriff’s Sale, homeowners in Michigan enter what’s known as the redemption period, which commonly lasts six months. During this time, the homeowner can redeem the property by paying the entire foreclosure sale amount, by refinancing their mortgage, and selling their property on the fair market.

Know Your Rights in a Lis Pendens Foreclosure

Lis pendens sounds like a fancy legal term, but all it means, essentially, is that a suit is pending. In the case of a property foreclosure, it notifies the public that a lender has started foreclosure proceedings against a homeowner who is in default of payment.

If you are facing a lis pendens or notice of default foreclosure in Michigan, it’s important to know what your rights are. The simple filing of either of these notices doesn’t mean you have to give up your home. In fact, there’s still plenty you can do to resurrect the situation.

That’s why it’s important that you know your rights and the steps you need to take to protect yourself. At Babi Legal Group, we have been helping homeowners like you for over 15 years to solve real estate disputes such as foreclosures.

Contact us today to find out how we can help you.

Foreclosure on Discharged Mortgage

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When individuals are facing economic struggles, they may proceed with filing for bankruptcy protection to get them back on the right foot. If these individuals are homeowners, the process gets a little more complicated.

Chapter 7 bankruptcy allows individuals to not include their home and associated mortgage in the bankruptcy proceedings, provided they are current on the loan obligation and have the ability to pay for the mortgage to remain in the home. It’s also possible for the individual to include the home and mortgage in the bankruptcy proceedings, which could result in the mortgage being discharged along with other debts.

Unfortunately, this process can be complicated and confusing. Some individuals may believe that when they’re mortgage is discharged, they are no longer financially responsible for paying it. And while that’s technically true, it doesn’t mean the borrower gets the home free and clear of the mortgage and that the mortgage company won’t foreclose on the home.

Below is an explanation of what typically happens when a lender forecloses on a discharged mortgage.

How Chapter 7 Bankruptcy Works

Through Chapter 7 bankruptcy, individuals can have their debts wiped out (i.e., discharged), if they meet various bankruptcy criteria as well as the economic standards set by the state they live in. The process will go through the bankruptcy court system, which will have to approve the bankruptcy.

Individuals will have to list all of their outstanding debts that they have  in bankruptcy. The Chapter 7 bankruptcy proceeding will conclude with the courts discharging the debts that are included — assuming the bankruptcy is approved, of course and the debts that the borrower (i.e., the Debtor) will keep by reaffirming in bankruptcy .

A bankruptcy discharge removes the individual’s responsibility from paying the debt in the future, essentially wiping out the amount they owe. The creditors in this case are often left empty-handed, though the bankruptcy Trustee may use the individual’s assets if unprotected in the bankruptcy to distribute to the creditors to make them as whole as possible.

In this sense, Chapter 7 bankruptcy provides individuals with the opportunity for a financial fresh start. However, it doesn’t provide them with assets free and clear of any debt obligation.

How Bankruptcy Affects Mortgages

As mentioned, if the mortgage is discharged through bankruptcy, the homeowner will no longer be responsible for the mortgage debt. This doesn’t mean that they have a free home to live in, though.

The bankruptcy will only eliminate the mortgage debt. What it doesn’t do is clear the lien on the property. 

All mortgages consist of two sections.

The first part is the promissory note, which is the personal assurance from the homeowner that they’ll repay the money they are borrowing. This is what ends up being discharged during a bankruptcy.

The second part is the actual mortgage itself, or the deed of trust. This is what puts a lien on the property. The lien remains on the property until the home owner pays off the mortgage.

The bankruptcy proceedings don’t discharge the second part, meaning that the lender still holds the lien on the property. Because of this, they still hold a legal right to foreclose on the property to reclaim their asset.

Will Foreclosure Always Follow a Discharged Mortgage?

Surprisingly, lenders won’t always foreclosure on a home after the mortgage has been discharged through bankruptcy. If the homeowner is able to remain current on mortgage payments, and if they don’t have much equity in the home, then the lender may decide it’s not worth their time or effort to foreclose and can continue to accept payments.  However, this does not prevent the mortgage company from foreclosing at any time they may deem it necessary.

In essence, the lender could decide to allow a homeowner in this situation to remain in the home, as long as they keep paying the mortgage. Since there isn’t much equity in the home, the lender might make out better by collecting monthly mortgage payments rather than trying to take ownership of the home.

However, if the homeowner doesn’t make mortgage payments, or if they have a lot of equity in the property, the lender would be more likely to foreclose on it. That’s because they could reclaim a most if not all of the money they were owedwhen the mortgage was discharged during bankruptcy.

How Foreclosure on a Discharged Mortgage Works

Even though the mortgage debt has been wiped out by the bankruptcy, a lender simply can’t kick an individual out of the home. They’ll still technically remain the owners of the home until the lender completes the legal process of foreclosing on the home.

That’s because foreclosure is the legal process that’s necessary for the lender to reclaim ownership of their property. Until this process is complete, the homeowner will remain the legal owner of the property. Foreclosure will formally remove their name from the home and transfer it to the bank, giving them legal rights to the home itself and the ability to re-sell it.

There are very specific steps that all mortgage companies must take to foreclose on a home. Each state has its own rules and regulations for this, and these don’t change just because the mortgage has been discharged in a bankruptcy. 

In other words, a lender can’t simply show up at the property, kick the homeowner out and change the locks. They need to follow the same legal proceedings that are set out by the state in which the property is located.

Work with a Trusted Law Firm

 

Even if your mortgage has been discharged through a bankruptcy proceeding, you still hold rights to the property until the mortgage company completes the foreclosure process. Many homeowners may not know this, and mortgage companies may try to take advantage of them as they’re in a vulnerable position — forcing them out of the home before they have to.

It’s important to know your rights if you are facing foreclosure on a discharged mortgage. Working with a trusted law firm such as Babi Legal Group will help you avoid being taken advantage of.

At Babi Legal Group, we have more than 20 years of real estate experience, as well as more than 15 years in business law, criminal, bankruptcy, debt collection and debt settlement experience. Our attorneys have the knowledge about what rights you have in this situation, and we ensure all of our clients are always protected.

Contact us today to find out how we can help you.

What Is Writ Of Assistance In A Foreclosure?

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When homeowners fail to meet the requirements of their mortgage, lenders will often proceed with a foreclosure to reclaim their property. This is done because the property itself is what’s used as the collateral to secure the loan.

Until the borrower pays the loan off, the collateral — the property in this case — remains an asset they can seek to recover to pay the outstanding balance owed. The lender then has the right to foreclose on the property when the borrower doesn’t pay the agreed-upon mortgage.

While there are different processes and requirements that are set by each individual state, the end goal of foreclosure is the same — to reclaim the unpaid balance owed through the collateralized property.

Despite a formal foreclosure process taking place, there are sometimes when the lender will need help to remove former owners from the property once a sheriff’s sale has gone through. This is done through what’s called a writ of assistance.

Let’s dive deeper into how this works.

The Foreclosure Process in Michigan

In Michigan, majority of mortgage payments are due on the first of the month, and are considered delinquent as of the second, unless a grace period is offered. Lenders are able to assess late charges for any late or missed payment, though they are required by state law to make a live contact with a borrower to discuss options they have for loss mitigation.

If the payment hasn’t been made by Day 45, the lender will assign a point of contact for the borrower and provide them with written delinquency notification as well as their options for loss mitigation.

In most instances, from this point until Day 121, borrowers are able to work with lenders directly on these options, which could include partial payments or a modification of the loan. 

The foreclosure process can start on Day 121 if the borrower hasn’t made the proper payment or come to an agreement with the lender. At this point, the lender will schedule a date for a sheriff’s sale, which must be published in a local newspaper four weeks in a row. The date of the sale will also be posted on the property itself two weeks after the first publication date.

The Redemption Period

Michigan foreclosures allow for what’s known as a Redemption period. This starts on the day of the sheriff’s sale and runs for six months after it, in most cases. The redemption period can last up to 12 months if the amount that’s outstanding on the mortgage is two-thirds of the total amount of the original loan or less.

The redemption period for farming property also can be as much as 12 months. 

During this period, the borrower is allowed to remain living in the property without having to make any payments. They should maintain the utilities and insurance on the property as well as be responsible for maintaining the quality and upkeep of the property.

The homeowner has to allow the person or entity who purchases the property at sheriff’s sale to inspect the property during this period.  Failure to allow the required inspection can result in a Court reducing the allowed redemption period.

They also have the opportunity to redeem the property by paying whatever amount is bid at sheriff’s sale, plus any fees and interest.

Evictions after the Redemption Period

Once the redemption period ends, the borrower must vacate the property. If they haven’t done so voluntarily by this period, the new owner will likely seek a summons for eviction, which would be held in the District Court the property is located in. 

If the purchaser at foreclosure is successful in the eviction they will receive an order for possession of the property, then the court will set a date at which the local sheriff to remove the borrower from the property if the borrower doesn’t voluntarily vacate on their own. This is done by an official document called a writ of assistance or an order of eviction.

What is a Writ of Assistance?

A writ of assistance is an official order issued by a court that directs one party to deliver or convey a property, and transfer a deed, right of ownership or document to another party. In the case of a foreclosure, the writ of assistance essentially serves as an official eviction from a property.

The writ of assistance will outline what the homeowner needs to do and by when. Usually, this will simply include a date by which they need to completely remove themselves and their possessions from the property.

The document will also include language that explains what will happen if this isn’t done voluntarily. In Michigan, this means that the local sheriff will show up to the property on the specified date and escort the person off the property and throw out all the personal property in dumpsters that are brought to the property on the day of the eviction.

The sheriff will essentially serve as the overseer, ensuring that the person vacates the property and removes their personal property, and that the locks are changed by a registered locksmith to ensure the new owner is the only one who can access it. 

Foreclosures in Rental Properties

When the property being foreclosed on is a rental with tenants on premises, the rules aren’t as straightforward. A writ of assistance can’t simply be issued once the redemption period ends.

How long tenants are able to remain in the rental property, and the other rights they have, depend on a number of factors, including when their lease was signed and how long it lasts for. Some tenants may even be able to make some money in return for vacating the property voluntarily, in what’s known as a cash-for-keys deal.

Know Your Rights in a Foreclosure

If you’re going through a foreclosure in Michigan, it’s very important to know what rights you have. Some lenders will try to force you out of a property — or take the property from you — before you legally have to leave. It’s also key to know when you will be able to reclaim the property through, and what you have to follow to do so.

If you are facing a writ of assistance in a foreclosure in Michigan, you want to work with an experienced law firm that can help guide you through the process. Babi Legal Group has been helping homeowners in these situations for many years now.

The attorneys at the practice have 20 years of combined experience in real estate, with more than 10 years of experience in business, criminal, debt collection and debt settlement law.

Contact us today for assistance if you’re facing a foreclosure in Michigan.