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Foreclosure Michigan can be stalled,
The perfect mortgage storm hit Michigan towards the end of 2008 and is still affecting homeowners. Rising unemployment levels, higher monthly mortgage payments and a drop in housing price have caused Michigan to have one of the highest foreclosure rates in the U.S.
What can homeowners do to avoid a foreclosure? As explained in our previous article, federal and state institutions (government and nongovernmental) advise troubled borrowers to contact a housing counselor and attorney as soon as possible. Michigan law provides borrowers with 14 days from receiving the foreclosure notice to hire a housing counselor and/or attorney. If you haven’t already check that article for a list of state and federal approved agencies that provide housing and legal advice for free.
Once you have contacted a housing counselor Michigan law provides you with 90 days to negotiate a mortgage workout with your lender. There are steps you must take immediately if you are at risk of losing your home to a foreclosure.
First, review your mortgage documentation and make sure you understand what type of mortgage you have. There are three main types of mortgages: Fixed rate Mortgages, Adjustable Rate Mortgages and Hybrid Adjustable Rate Mortgages.
Fixed rate mortgages don’t change the interest rate applicable to the mortgage; monthly mortgages remain the same throughout until the loan is paid. If your mortgage is not a fixed rate mortgage and you plan to stay in your home for a several years you should consider refinancing your mortgage to a fixed rate.
Adjustable Rate Mortgages have interest rates that constantly change depending on the going interest rate. This means your mortgage payments can rise or drop. This makes it harder to budget and if interest rates rise you may not afford your mortgage payments.
Hybrid adjustable rate mortgages provide fixed mortgage rates for some months or years and then switches to an adjustable rate. These mortgages are sometimes designed to attract customers with low initial mortgage payments.
Second, contact your lender. Unfortunately many homeowners panic when they receive a foreclosure notice and ignore calls and mail from their lender. This will only lead to losing your home. You have 90 days to fix your mortgage, act quickly. Your housing counselor sometimes can give you contact details for your lender’s loss mitigation department. This department aims to resolve delinquent mortgages and put them back on track. The earlier you contact your lender the more options you will have; many workouts and mortgage aid programs only work if you are one or two months behind in your payments.
There are five main alternatives to foreclosure, three of which involve keeping your home: repayment plan, forbearance, loan modification, selling your home or a deed in lieu of foreclosure. Talk to your counselor or attorney about which alternative is best for you.
Third, you need to get organized and collect all the paperwork your lender’s loss mitigation department will need. This includes a budget, proof of income, record of mortgage payments and copies of all correspondence with your lender. This will help you fill in all the forms your lender will ask for when looking for a loan workout. For more information on the Michigan foreclosure process visit www.michigan.gov/mshda.
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