Michigan foreclosure questions

[outofwork11]

My house is going into foreclosure. I do not want to file BK, but am concerned about the deficiency judgement at a later date. I have a 1st mortgage that was a r/t refi in MI. I am concerned that years later the mortgage company will come after me and my husband. My husband may get an inhertinance in a few years and I do not want it taken.... Help

[justbroke]

While some States have non-recourse (no deficiency) provisions in the laws... many are them are for loans used to purchase the home... and not refinances. But that's neither here nor there in your case.

Michigan does allow deficiencies. However, my read is that a defense to the deficiency amount is a claim that the property was worth more than it sold for. I also read where most of the time, the mortgage company bids the balance due on the mortgage at the public auction.

I would suspect that you may just get a 1099-C or they sell the debt to a JDB who hounds you for years, gets a judgment, and attempts to cash in on it.

[Faithfullymovin]

Same Boat

Hi:

Our house is in foreclosure in Michigan as well. The economy is so very bad there. My husband found a job out of state.

We live in Georgia and we could not afford to keep paying on a house that would never sale. We are very upside down as well, so we had no other choice.

The sale date for our house is set for January 7th and we are waiting to see what our mortgage company will do next.

We do not want to file BK either. We have rented a brand new house from a local builder and signed a 3 year lease. I have found out after examining our lease agreement that we are in default of the lease if we file bk so we do not want this on us as well, so we are looking for other options but might not have any.

You can search my name for my post and see where we have been with this in the last several months.

I will keep you posted on the outcome of our situation and please do the same.

Faith

[justbroke]

We do not want to file BK either. We have rented a brand new house from a local builder and signed a 3 year lease. I have found out after examining our lease agreement that we are in default of the lease if we file bk so we do not want this on us as well, so we are looking for other options but might not have any.

That's standard language so as to protect the landlord. It doesn't mean that your lease will not be renewed or will be instantly terminated... it just means that it's in a State where it needs to be cured.

Generally, a Bankruptcy will assume or reject residential leases. Rejection is what happens when you do nothing. The landlord, though the lease, is trying to protect themselves from your rejection of the lease during a Bankruptcy.

Assuming the lease should cure the "default" so long as you are up to date on payments, and continue to pay on time.

You should never even weigh lease default over filing Bankruptcy.

Of course, that's just my opinion.

[Faithfullymovin]

That's standard language so as to protect the landlord. It doesn't mean that your lease will not be renewed or will be instantly terminated... it just means that it's in a State where it needs to be cured.

Generally, a Bankruptcy will assume or reject residential leases. Rejection is what happens when you do nothing. The landlord, though the lease, is trying to protect themselves from your rejection of the lease during a Bankruptcy.

Assuming the lease should cure the "default" so long as you are up to date on payments, and continue to pay on time.

You should never even weigh lease default over filing Bankruptcy.

Of course, that's just my opinion.

Just Broke:

Thank you so very much for your response. I have been worried sick about this.

I am still a little confused. You are saying that if I do not include them in the bk and keep paying everything on time and go by the other guidelines of the lease then the default clause cancelled?

Please explain a little more.

Thanks so much

[justbroke]

I am still a little confused. You are saying that if I do not include them in the bk and keep paying everything on time and go by the other guidelines of the lease then the default clause cancelled?

You need to positiviely assume the lease in your Bankruptcy. There's a process for this and your lawyer will be aware. You don't want the lease to be automatically rejected. Explain that you want to make sure the lease default is cured and that you are not in any position of default after the BK.

After filing, you may also want to speak with the builder and let them know you're assuming the lease, and would like this to not affect future renewals.

Most landlords want a paying client and not to have to evict anyone anyhow. It costs as much as two month's rent to get a new tenant! (Trust me!) It's easier and cheaper to let you stay... if you pay on time and are a model tenant.