Archive for year: 2024

Every state has the right to set different rules and regulations for residential foreclosure. This can make it tough for homeowners to understand what their rights are, especially if they own property in another state.

The Michigan foreclosure process can be complex, but it’s very important to understand the laws and regulations that govern it. Just like other states, borrowers enjoy protections under Michigan foreclosure laws, including the right to a judicial foreclosure process vs. the Michigan foreclosure by advertisement.

This means that the foreclosure process will play out in the court system, rather than outside of it. 

Typically speaking, a judicial foreclosure in Michigan will begin with the borrower being sent a notice of default from their lender. That will be followed by an official lawsuit being filed and, if nothing is done to satisfy the outstanding debt, a foreclosure sale will take place.

Prior to Once the foreclosure process beginning, borrowers have the option right in Michigan to seek a loan modification or other loss mitigation alternatives to avoid losing their home.

Below, we’ll discuss how Michigan’s judicial foreclosure process works and how it affects out-of-state property owners.

The Judicial Foreclosure Process in Michigan

A judicial foreclosure in Michigan requires lenders to file a lawsuit against the borrower when they want to foreclose on a home.

Once the initial lawsuit is filed, the borrower will have 21 to 28 days to respond to it depending upon how the lawsuit was served upon them. If they fail to respond to the lawsuit, the lender has the right to obtain a default judgment to initiate the foreclosure auction process also known as the sheriff’s sale.

It can take several months for the judicial foreclosure process to complete in Michigan, and if it goes all the way to the end, it could involve a sheriff’s sale. This is an event where the home will be auctioned off to the highest bidder, with the lender trying to recoup as much of their losses as possible.

At any point during the judicial foreclosure process in Michigan, borrowers have the right to seek the advice of an experienced foreclosure attorney, such as those at Babi Legal Group. This is very important, as you need to understand what your rights and protections are throughout foreclosure.

Key Steps Leading to a Foreclosure Sale

In Michigan, mortgage loans are considered delinquent if they are one day past the due date. At this point, late charges can be assessed, and the lender or servicer has to make live contact with the borrower about the options they have.

At Day 45, the lender or servicer has to assign a specific contact to the borrower and provide written notification of the loan delinquency as well as the borrower’s options for loss mitigation.

If no resolution has been made by Day 121, the lender can proceed with the foreclosure process in Michigan.

At this point, they can file a complaint with the court to initiate the judicial foreclosure process. The borrower will have 21 days to respond to it, and the lender can obtain a default judgment and proceed with the foreclosure sale if the borrower does nothing at this point.

This sale is typically conducted by a local sheriff or other authorized official.

Options for Borrowers During the Foreclosure Process

The start of the foreclosure process is not the end of homeownership for borrowers. In the state of Michigan, borrowers have many rights and protections that can allow them to satisfy the outstanding debt so they can remain in their home.

It’s possible that while the foreclosure process is going on, borrowers can negotiate a loan modification or other repayment terms so they can avoid foreclosure. Housing counselors also may be able to explore other alternatives for borrowers so they can avoid foreclosure.

In certain cases, borrowers might be able to file for bankruptcy, which could stop the foreclosure process.

If you’re facing foreclosure, it’s very important to seek the advice of an experienced foreclosure attorney so you know all your rights, protections and options.

Redemption Period and Deficiency Judgments

Even after a home is sold at sheriff’s sale, borrowers in Michigan can still redeem their loan so they can remain in their home and satisfy the mortgage lender balance. This is called the redemption period.

In Michigan, the redemption period can last anywhere from six months to one year, based on a number of factors. The borrower can purchase the property back at this point by paying for the amount that was bid at the sheriff’s sale, plus any interest and/or fees that were incurred.

If the borrower fails to redeem the property during this period, then they will for the most part lose their rights to the property, and if still residing in the property will be facing an eviction lawsuit to recover possession of the property.

Consequences of Foreclosure

There are many serious consequences that borrowers can face in foreclosure. 

First and foremost, they may face eviction proceedings after the foreclosure sale, which would leave them without a place to live. While it’s possible for borrowers to negotiate a settlement with the lender to avoid eviction, it’s still a very real possibility.

Those who are foreclosed on also take a big hit to their credit score. This can hamper their ability to purchase or even rent a new place to live for a certain period of time.

This is why it’s very important to seek the advice of a foreclosure attorney if you’re facing foreclosure in Michigan.

Protections for Out-of-State Property Owners

Anyone who owns property in Michigan can be subject to the state’s foreclosure laws — even if their primary residence is in another state. The laws that regulate the foreclosure process, as well as the rights and protections for the borrower, depend on where the property in question is located, not where the borrower holds their primary residence.

Just like Michigan residents, out-of-state property owners enjoy the same rights and protections, as well the ability to seek advice from a local attorney who is familiar with the Michigan foreclosure laws. If you live outside of Michigan, you may also need to comply with federal mortgage servicing laws.

Seeking Help and Resources

If you are facing foreclosure in Michigan, it’s important to understand your rights, protections and options. 

Borrowers facing foreclosure can take advantage of the resources and assistance that is provided by the Michigan State Housing Development Authority (MSHDA). Housing counselors may also be able to explore alternatives to foreclosure, and non-profit credit counseling agencies may also be able to help.

The best thing to do if you’re facing foreclosure in Michigan, though, is to seek the advice of an experienced foreclosure attorney.

The professionals at Babi Legal Group have more than 20 years of real estate experience, and more than 15 years of foreclosure, bankruptcy, debt collection and debt settlement experience. For more information, contact us today.

Bankruptcy can provide a financial lifeline to people who find themselves in a bad debt position. It can be a way out, a fresh start from an economic standpoint if you find yourself in over your head with no apparent way out.

When you file for bankruptcy, certain debts can be discharged, which essentially eliminates them from your “balance sheet,” so to speak. Depending on what type of bankruptcy you file, and whether you qualify, this can erase debts that you are having trouble repaying.

At the same time, the bankruptcy court will analyze your ability to repay your debts using your income sources and other assets.

One major question that a lot of people have is whether Social Security benefits can be considered income in bankruptcy proceedings. Below, we will discuss this issue in more depth, as well as provide suggestions on how you can protect your assets in bankruptcy.

Understanding Social Security Benefits in Bankruptcy

Those who earn Social Security benefits know that this money is generally considered income. Every year, Social Security benefits have to be claimed as income on tax returns along with other typical income earned through a W-2 or 1099.

That being said, Social Security benefits are generally considered exempt assets. This means these benefits can’t be used in “means test” calculations when deciding how creditors will be repaid, if at all, in a bankruptcy case.

There is one major exception, though, which is important to understand. According to rules set up by the Social Security Administration, Social Security benefits will remain uncollectable from creditors as long as the funds aren’t commingled with other funds.

To protect your benefits, an experienced bankruptcy attorney will usually recommend setting up a dedicated bank account just for Social Security benefits. This ensures that they aren’t commingled with other funds and remain Uncollectable.

Bankruptcy Options and Social Security Income

There are two main types of bankruptcy that individuals typically file.

The first is called Chapter 7, and it’s known as a liquidation process. Through it, many unsecured debts such as credit card balances get discharged, with individuals being allowed to keep some assets that are determined exempt, such as vehicles and homes.

Social Security income is not included in the Chapter 7 means test, which makes it easier for individuals who receive it to qualify for Chapter 7 bankruptcy in some cases.  However, the Courts are split and do not treat Social Security income the same as some Courts consider it income for the purposes of what a Debtor can repay in the bankruptcy case, while others consider non-income for the purposes of bankruptcy.

Chapter 13, meanwhile, is known as a debt-repayment plan or restructuring. It’s a way to come up with how to repay creditors in a more beneficial way to the borrower. In these cases, the debtor is able to retain all their assets while making repayments according to a plan established and approved by the court.

Protecting Your Social Security Income

There are special protections that apply to Social Security income, whether you file for bankruptcy or not. For instance, as long as you can prove that the funds in question are income from Social Security benefits, then a creditor doesn’t have the ability to force a bank to withdraw that money in order to pay an outstanding debt.

The easiest way to do this is to create a separate bank account that’s dedicated solely to Social Security income. This will make it easy to prove the source of the funds and ensure they remain protected in bankruptcy proceedings.

While filing for bankruptcy gives you some added protections in relation to income and assets, it doesn’t provide any extra income protection for Social Security income, and in-fact in some courts may allow that social security income to be used to repay your creditors.

If you have received past disability payments and/or disability back pay and haven’t spent all the funds, that money may be considered property of your bankruptcy estate. As such, it could be subject to distribution to your credits in Chapter 7 bankruptcy cases if not properly exempted.

The Impact of Bankruptcy on Social Security

Social Security benefits were created by the federal government to ensure that people were able to live a financially secure life as they age and leave the workforce. To this point, these benefits are shielded from creditors’ claims, which reflects the agency’s commitment to protecting the financial well-being of all beneficiaries.

Regular Social Security benefits are specifically excluded from being garnished by creditors, per federal law. However, unspent past disability payments that are mixed with other money may be pursued by a Chapter 7 trustee as it may be difficult to ascertain if they were actually social security funds.

That’s why it’s very important to understand how bankruptcy affects funds you may receive from Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) back pay.

Working with an Attorney: Understanding the Attorney-Client Relationship

Understanding all the pertinent bankruptcy laws and what applies to you can be challenging. That’s why it’s typically a good idea to advise with a trusted local bankruptcy attorney who has experience working in your state.

When you’re working with an attorney, it’s essential that you understand how the attorney-client relationship works and how that will apply to your bankruptcy case. By law, you’re allowed to work with as many as three attorneys so you can find the best fit for your particular case.

The attorney you choose should help you properly navigate the process of bankruptcy and ensure that as much as your assets as possible can be protected, including any Social Security income you receive.

During meetings with your attorney, you should come prepared to share sensitive and/or confidential information about yourself and your financial situation. This will help your attorney fully understand your situation so they can best represent you in court.

If you are in debt, you may start receiving marketing messages from local attorneys who wish to represent you. As with anything, though, it’s important to be cautious and do your research before you select an attorney to represent you.

Next Steps: Filing for Bankruptcy with Confidence

If you’re considering filing for bankruptcy, it’s very important that you understand how it will affect every aspect of your finances and assets, including your Social Security income. Since this can be complicated to fully understand if you don’t have experience, it’s best to consult with an attorney you can trust to determine the best course of action based on your specific situation.

Your attorney should walk you through the debt relief options that are available to you, including Chapter 7 and Chapter 13 bankruptcy and what each entails. 

They will guide you through how separate trust funds are used to pay disability benefits and how that may affect your bankruptcy case. And they will also discuss how retirement benefits and other income may be impacted by bankruptcy.

By consulting with a trusted attorney like those at Babi Legal Group, you can ensure you understand all of these concepts before filing bankruptcy so you can put yourself in the best situation possible.

Our attorneys have more than 15 years of experience in bankruptcy, debt collection and debt settlement, and can provide you with the best advice that you can trust. For more information about how we can help you, contact us today.

Despite regulatory measures meant to prevent it, predatory lending is a major problem in the U.S. today. People are sometimes desperate to purchase a home or are uneducated on specific details of mortgages, and some lenders seek to take advantage of that.

Predatory lending refers to any unfair, deceptive or abusive loan terms that predatory lenders impose on borrowers. Most of these loans will have high interest rates and fees, might strip the borrower of the equity in their home or even place a creditworthy borrower in a loan that’s rated for people with lower credit.

These lenders seek to take advantage of someone’s lack of understanding of financial vehicles by using aggressive sales tactics to get them to agree to something that isn’t in their best interest.

There are many different types of predatory lending practices, including subprime credit cards, overdraft loans and payday loans — all of which have interest rates that can only be termed as unreasonably high.

Anyone can become the victim of predatory lending, regardless of their income, demographics or education level. Understanding what predatory lending is, and what it can result in, is essential to avoiding signing on the dotted line for one of these loans.

Predatory Lending Tactics

Predatory lenders are looking to do one thing — take advantage of people who are vulnerable to lend them money at unreasonable terms.

“Vulnerable,” in this regard, can refer to many different people in many different situations. Vulnerable populations for predatory loans include people who have limited access to financial education, who are in a desperate situation when it comes to their housing and/or have low credit scores and, as a result, fewer options for credit than others.

Predatory lenders seek out people in these populations and then use deceptive practices to make them feel as if they’re getting a good deal. In reality, though, they take advantage of borrowers’ financial struggles, and profit from them, with high interest rates, exorbitant fees and other unfair loan terms.

These lenders know exactly what they’re doing, and they play to these borrowers’ emotions and situation. They might use aggressive sales tactics, exploit borrowers’ lack of understanding, and even ignore or hinder a borrower’s ability to repay debts.

Some even hire mortgage brokers to specifically target certain borrowers so they can sell them predatory loans.

One common tactic that these lenders use is called loan flipping. This occurs when a lender refinances a loan with a higher interest rate and fees, which ultimately hamper’s the borrower’s ability to repay the loan.

The Impact of Predatory Lending

There are many impacts of predatory lending, both on a micro and macro level. 

From a micro perspective, predatory lending can have a huge negative impact on individual borrowers. It can lead to them entering a debt spiral and experiencing significant financial struggles, which can ultimately lead to foreclosure for borrowers.

Not only can this result in borrowers losing their home, it can also create significant mounds of debt, financial instability and, in the worst case, even bankruptcy.

From a macro perspective, predatory lending can exacerbate social and economic inequalities, which then perpetuates cycles of financial instability and poverty.

That’s because predatory lenders often target minority groups, including ethnic and racial minorities, because they commonly have limited access to financial and credit resources.

Who is Affected by Predatory Lending?

While anyone can technically be affected by predatory lending, minority groups and those of lower economic standing are the ones who are often targeted by predatory lending. That’s because, in essence, these lenders rely on having an advantage of information over their borrowers, and these borrowers typically have less information and knowledge about finances and credit than others do.

In addition to minority groups, low-income families and individuals are often the target of predatory lending practices. So, too, are elderly homeowners who might not only not be “up-to-date” on predatory lending tactics, but also have limited access to additional credit.

Predatory lenders take advantage of these vulnerabilities, and much more, to prey on borrowers who often don’t know any better. That’s why anyone can be a victim of this type of lending, regardless of their income, demographic background or education level.

Prevention and Protection

Since predatory lending relies on a lack of information and education on the part of borrowers, the best way to avoid a predatory loan is to be educated about them. The more knowledge you have about predatory loans, and the more research you do about them, the better prepared you will be to avoid them.

In addition, it’s important to know what your credit rating is so you can identify any potential issues before even applying for a loan. Federal law allows all U.S. residents to obtain a free copy of their credit report at annualcreditreport.com.

When you are presented with a loan offer, it’s important that you read all the documents carefully and understand all of the terms before you sign your name on the dotted line. 

If you want more information or resources about mortgages, you can always seek help from credit and housing counselors, who can help you decide whether a loan is right for you.

Ultimately, it’s important to trust your instincts and ask questions. If a deal sounds too good to be true, it probably is.

Reporting and Addressing Predatory Lending

If you suspect that a company is using predatory lending practices, you should report it to the proper agencies. There are actually a few agencies that can help you in this regard, both from the federal and state level.

The Consumer Financial Protection Bureau (CFPB) accepts complaints on its website and over the phone. So does the Federal Trade Commission (FTC), which is an agency that’s dedicated to protecting U.S. consumers.

Legitimate banks, lenders and credit unions should all also have a regulatory agency that is responsible for oversight. You can find out which agency that is and report them there, too.

Every state should also have a consumer protection organization. In Washington State, for instance, the Washington State Department of Financial Institutions (DFI) is responsible for regulating and enforcing all lending practices.

By filing complaints with the appropriate agencies, you can help to hold predatory lenders accountable and prevent other borrowers from falling prey to their practices.

Seeking Justice and Compensation

If you believe you’re a victim of predatory lending and can prove that your lender violated federal or local laws, it might be a good idea to file a lawsuit. A good place to start is to contact your state’s consumer protection agency, as they can provide you proper guidance and support.

Federal law, and most state laws, provide consumers with the right to file a lawsuit against predatory lenders and seek compensation for damages incurred. It’s possible that if you’ve been a victim, you could gain compensation or some other form of relief.

If you believe you’ve been a victim of predatory lending in Michigan, contact the experts at Babi Legal Group. 

The Role of Regulation in Combating Predatory Lending

Predatory lending was a major cause of the 2008 financial crisis. In fact, subprime mortgages were the main driver of the U.S. economy, and many economies around the world, crashing.

To prevent a similar situation from happening in the future, the federal government passed the 2010 Dodd-Frank Act, which not only established provisions that sought to minimize predatory lending but also created the CFPB.

Many states have also established anti-predatory lending laws, with some outlawing practices such as payday lending completely.

Other agencies that play a role in regulating and enforcing lending practices include the FTC and Housing and Urban Development (HUD). Laws such as the Equity Protection Act also work to protect borrowers from predatory lending practices and other abusive loan terms.

While state-specific and federal laws, as well as federal agencies, were created to combat predatory lending, protections and rules are always subject to change.

Seek Justice and Compensation if You are the Victim of Predatory Lending

Predatory lending is a serious issue that can have devastating consequences for individual borrowers, entire communities and society at large. The key to avoiding predatory loans and protecting yourself from them is to increase education and awareness about them.

Regulation and enforcement also play essential roles in not only combating these predatory practices but also in promoting fair lending practices.

If you believe you’ve been the victim of predatory lending, you should seek justice and compensation, as well as report the practices to the relevant authorities.

In Michigan, the experts at the Babi Legal Group can help you with your claim. We have more than 10 years of experience in debt collection, debt settlement and bankruptcy, with another 20 years of experience in real estate.

To learn more, contact us today.

Active-duty service members and their families receive legal and financial protections of a federal law called the Servicemembers Civil Relief Act, or SCRA. Any person who is serving in active duty, which includes the reserves and National Guard, can enjoy the many important benefits that the law provides.

While very beneficial, the SCRA can also be complicated to understand. That’s why it’s always advisable to reach out to a local legal assistance office if you meet the requirements of the program and are struggling to meet your financial obligations.

One protection that active-duty members receive under the SCRA is from foreclosures.

Below, we’ll discuss the SCRA in more depth, including how it pertains to qualifying individuals who are struggling to repay their mortgage obligations.

SCRA Protections for Servicemembers

The benefits that the SCRA provides to active-duty service members and their families are vast. It includes lower interest rates, protection against evictions and default judgments, postponement of matters in civil court, termination of their auto leases and phone service, coverage for life insurance, delays on foreclosures and much more.

The law applies to any individual who is “materially affected” by their service in the military. This includes any full-time active duty member of any of the five branches of the military, any reservist who’s on active duty and any National Guard member who’s on federal orders for 30 days or more, as well as their family members.

One of the provisions of the SCRA is that all credits have to reduce interest rates on all debts to 6% for any liability that was incurred before the borrower entered active duty. This reduced rate also extends for one year following active duty if the debt in question is a mortgage.

In addition, the law provides protection against default judgments, eviction and foreclosure. The SCRA states that no property seizure, foreclosure or sale that’s being done for non-payment can happen if it’s made either during the borrower’s active-duty service or within nine months after that service ended.

The only exception is in the case where one of the above is being done to follow a court order.

This protection is a major benefit for all borrowers who qualify, but especially for those in states that don’t require judicial foreclosure.

Any qualifying individual can also request a delay of 90 days for any civil court proceeding if their service prevents them from appearing in court. This delay is automatically granted, and another 90 days can be added on top of that if granted by a hearing officer, magistrate or judge.

How the SCRA Applies to Foreclosures

In relation to foreclosures specifically, the SCRA provides protections to all qualifying borrowers who took out a mortgage prior to entering active duty. This is generally referred to as a “pre-service mortgage obligation.”

Those who meet these requirements can’t have their home foreclosed on while they are on active duty. The protection will in most cases extend for nine months following the active duty ending as well.

These protections are granted to active-duty members regardless of whether they informed their mortgage servicer or lender about their military status.

What the SCRA does, in this case, is allow service members to manage their mortgage obligations so they can avoid foreclosure. Active-duty service members and their families may have trouble meeting their financial obligations simply because they are away from home. This law ensures that they have adequate time to serve, come home and manage their financial obligations properly.

If service members are still having trouble meeting their mortgage obligations once the protection period ends, they can request a further stay of their foreclosure proceedings.

Waivers of Rights under the Civil Relief Act

All of the rights that are provided under the SCRA are given to all those who qualify automatically. Active-duty service members can choose to waive these rights, though they have to do so through a written waiver that they need to sign either during their military service or after it’s over.

Any waiver that is signed before an individual actually enters military service will be deemed invalid under the federal law.

If you are considering signing a waiver of your rights under the Servicemembers Civil Relief Act, you should read over all the waiver documents very carefully. It’s also a good idea to seek the advice of a qualified attorney who can inform you of what rights you are giving up so that you can fully understand whether it’s in your best interest to do so. 

Accessing SCRA Benefits and Protections

If you are looking for more detailed information on the SCRA, you should visit the official Servicemembers Civil Relief Act website. The site provides full details on the federal benefits that the law provides as well as the protections that are offered and who they are offered to.

Active-duty service members and their families will find this website extremely valuable so they can better understand the rights they are extended through the federal law. 

In addition to a wealth of resources, the website provides the ability to submit single record requests that certify Title 10 active duty status and much more.

Know Your Rights Under the SCRA

The SCRA is a federal law that provides important protections for active-duty service members and their families. This includes protection against foreclosure during active duty and for a period of time after that duty has ended.

It’s important to understand your rights under SCRA so you can take advantage of them, and seek help from local legal resources if you find yourself in financial trouble.

Babi Legal Group has more than 20 years of experience in real estate law, and more than 10 years of experience in fields such as debt collection, debt settlement and bankruptcy. 

Contact us today to learn more and to get advice on your rights under the SCRA.

When homeowners stop meeting their repayment obligations, mortgage lenders can initiate the process of foreclosure to recoup the losses that they’ve incurred. At the end of this process, the home is typically sold at a sheriff’s sale auction, with the proceeds going to the lender.

Sometimes, the amount that the home is sold for is less than what the borrower owed on this mortgage. If this happens, it creates what’s called a deficiency.

In some states, mortgage lenders are able to go after the borrower personally to cover this deficiency. However, anti-deficiency laws are in place in other states that prohibit or limit a residential mortgage lender’s right to recover this discrepancy from the borrower.

In certain situations, these anti-deficiency laws can protect borrowers from facing deficiency judgments, which can be extremely detrimental to their finances. 

Just like most other foreclosure rules, anti-deficiency laws are set on a state-by-state basis, with much variation, specific requirements and possible exceptions.

Deficiency Judgment: What Borrowers Need to Know

In states that allow it, mortgage lenders are able to file a civil lawsuit against a borrower to seek the difference between what the home was sold for at auction and the remaining outstanding balance on the mortgage. The lender obtains this through what’s known as a deficiency judgment, which is an official court order that requires the borrower to pay any remaining debt following a foreclosure sale.

As mentioned, what options a borrower may have to avoid a deficiency judgment depends on the state in which the home is located. In some states, borrowers can avoid a deficiency judgment by deeding their property to the lender before the process of foreclosure begins.

If you’re facing foreclosure, it’s extremely important that you know your rights as well as the rules and regulations regarding the process in your state. Because these laws can be complex and complicated, you should always consult with an experienced foreclosure lawyer to understand your options.

How Anti-Deficiency Laws Work

Anti-deficiency laws are official statutes that are on the legal books of individual states. These laws were designed to protect borrowers from facing a huge mountain of debt even after they lost a home to the foreclosure process.

These laws usually apply to purchase money loans, or mortgages, which are loans that are used specifically to purchase real estate. In some cases, refinance loans might be protected from deficiency judgments if they’re secured by a purchase money security device.

While anti-deficiency laws can vary greatly in detail from one state to the next, generally speaking, they don’t apply to vacant land or commercial properties. This means that the borrower in both of these cases wouldn’t be protected from a deficiency judgment following foreclosure. 

Many states also require that the property in question be a borrower’s primary residence for it to receive protection under anti-deficiency laws.

State-Specific Anti-Deficiency Laws

In total, there are 16 states that have anti-deficiency laws on the books. They are Wisconsin, Washington, Oregon, North Dakota, North Carolina, New Mexico, Nevada, Montana, Minnesota, Iowa, Idaho, Hawaii, Connecticut, California, Arizona and Alaska.

It is important to note, though, that some of the states on this list also include limitations and/or exceptions. 

In California, for example, the anti-deficiency law only applies to a residential property that’s used as a primary residence and that has no more than four units. It also only applies to purchase money mortgages.

The anti-deficiency law on the books in Arizona protects certain types of properties, as long as they have a purchase money mortgage. The home must be either a single-family home or a single two-family home. In addition, the home must be on 2.5 acres or less. 

Each state that has anti-deficiency laws has its own specific rules, regulations, limitations and exceptions. That’s why it’s important to educate yourself about the specific laws that apply to where you live.

Limitations and Exceptions

In addition to exceptions and limitations on the type of property, many states’ anti-deficiency laws don’t apply to certain types of loan.

Home equity lines of credit or home improvement loans may not fall under the umbrella of covered debt for anti-deficiency laws. In some states, there are also exceptions in place for loans that cover multiple properties, or for properties that have multiple liens on them.

In all of these cases, the mortgage lender, or lenders, may have the right to seek a deficiency judgment against you if your property and/or your specific loan type isn’t covered under your state’s anti-deficiency law.

Knowing whether your property is or is not covered is important if you’re facing foreclosure, because it might steer you in one direction or the next when you’re weighing your options.

Avoiding Unpaid Debt After Foreclosure

There are, of course, many concerns homeowners who are facing foreclosure have. In addition to losing your home and having to find another place to live, you must deal with the fact that your credit is likely to take a significant hit for an extended period of time if your home is sold through a foreclosure process.

In addition to that, if the current fair market value for the home is a lot less than what you owe on the mortgage, you could be on the hook for a significant amount of debt, depending on what state you live in.

If your state does not have anti-deficiency laws, you may have options to avoid a deficiency judgment. If you know that your home is likely to sell for less at auction than what you owe on the mortgage, you could do what’s called a deed-in-lieu of foreclosure.

Essentially, this is an arrangement struck between you and your mortgage lender where you will sign the deed of your property back to the lender before they foreclose on it.

In this case, you will be giving up your rights in the property in exchange for the lender not foreclosing on you.

Some borrowers may enjoy major advantages if their lender will agree to this.

For one, you’ll be released from all the debt you owe in the home immediately, without the huge hit on your credit. You’ll also not have to face public notoriety that goes along with foreclosure, since most states require the lender to advertise the date and location of all sheriff’s sales.

It’s also a way to avoid being potentially responsible for a mound of additional debt if the lender seeks a deficiency judgment against you.

Lenders do not have to agree to a deed-in-lieu of foreclosure, though, and it may take some negotiating to get it done. That’s why you should consult with a foreclosure lawyer who can present you the best options to avoid being responsible for unpaid debt.

Know Your Rights When It Comes to Foreclosure and Deficiency Judgments

Borrowers who are facing foreclosure need to be well-educated on all aspects of the proceedings. Unfortunately, there is no across-the-board standard for foreclosures, as the process varies greatly from one state to the next.

Understanding what these rules are, and whether anti-deficiency laws apply to you, are important because it can help protect you in a foreclosure situation.

If you’re facing foreclosure, it’s essential to consult with an experienced and qualified foreclosure lawyer so you can know all of your rights and options under applicable state law.