New at Foreclosure - after Sheriff's sale

[timberlane]

I was foreclosed on in Sept. I tried to do a deed in lieu, but had a 2nd mortgage I couldn't clean up in time. House went to Sheriff's sale, but did not sell. Bank says they own home and I have no liability. Foreclosure lawyer says I have one year "redemption" period in MI. Second mortgage is willing to settle. What happens with the first mortgage? Bank says they "own" it? Will they come after me for the total amount? What will happen now? I haven't received any paperwork on anything. It is like nothing ever happened? I'm scared though.

[tobee43]

did you file bk....and did you list the mortgages on the petition...did you affirm...retain or surrender the property??

sorry...but to answer you question there are just some question you need to answer..

have you filed bk is really first and if so chapter 7 or 13 and was it or is it still pending or discharged??

[timberlane]

i haven't done anything. I lost my job and my family moved to another state. WE

[tobee43]

if you have done nothing....it may be time to get some legal advise...really...you are deep into the situation at this point. you may want to consider bk

[timberlane]

i haven't done anything at all like this. I lost my job, my husband just got a job, we had a baby and moved to another state. We owned two homes and this was the 2nd home we couldn't sell for four years. I couldn't pay the mortgage anymore and asked to do a deed in lieu, but couldn't until the 2nd mortgage was cleared. I'm negotiating a deal with the 2nd mortgage company. However, I have no idea what is going on with the 1st mortgage. They say they "own" the home now b/c it didn't go to sherrif's sale, no one bought it and there is a problem with the deed, it is a mess. I couldn't sell it if I dropped the price in half. The mortgage was in just my name, as I was divorced when I owned it and remarried while I tried to sell it and then while it was foreclosed. The foreclosure lawyer said something about the bank having 60 days to file some kind of liability suit... I can't get anyone to tell me what is going on... what I owe... what the real story is.

[tobee43]

ok...well...first you need to sit yourself down.....i know that's difficult with a little one...but you need to get on the phone and get yourself an atty asap....

i don't care about the other atty's you have...it is apparently by just how scared you are, that whom ever was handling your case was not doing a very good job.

you need to find someone that can help you through this...even if you have to make 50 calls to find someone. you can't do this alone and you need help asap...so...my suggestion to you...is get off the computer and get a callin.....every atty that practices bk law within a reason amount of millage from you.

[timberlane]

thank you, one more question... why would I need to file bankruptcy? I don't know anything about this stuff, but if the bank owns the home now, they have it... and will try to sell it to someone else. do I still owe them the balance? what am i missing here?

[ccsjoe]

Hi timberlane,

I believe what tobee meant was get yourself a foreclosure or real estate attorney. To clarify a couple points for you, once you lose your home to foreclosure, unless MI is a non-recourse state and the loan is purchase money, then yes, they can sue you for the deficiency (difference between what you owed vs. what they sell for) or they can also issue you a 1099 for the difference if they forgive the amount.

I am not familiar with MI law, but once foreclosure happens there is usually no redemption period and the only way to redeem (should there be something like that) would be to come up with a cash offer to cover the arrears plus legal costs, etc. Furthermore, it is a common misconception that if a house doesn't sell at auction or Sheriff's sale, that it hasn't sold. This is false. The lender puts up the opening bid which is usually the amount you owe. That's the price at which the auction starts. If there are no other bidders, the lender wins the house. Thus lender owns the property.

[timberlane]

Thank you, for the info. MI is a "deficiency state". I was told that no one bid on it and I believe that to be true. The note was for $350K and it is on 20 acres. It is probably worth $150K in MI real estate market. The foreclosure lawyer said that MI has a year redemption period for properties over a certain number of acres. He said the bank owns it now and had something like 60 days to file a deficiency suit - or something like that. I don't want to call the bank and "remind" them because they seem to unorganized. We do not live in the home, I can't sell it and I can't afford to keep paying the mortgage. If 60 days pass, does that mean I am no longer liable for the total $350K? I thought that if you foreclosed,the bank owned the home and you would get "dinged" terribly on your credit. I realize I am very uneducated in this space, but I just thought that would be it.

[tobee43]

Hi timberlane,

I believe what tobee meant was get yourself a foreclosure or real estate attorney. To clarify a couple points for you, once you lose your home to foreclosure, unless MI is a non-recourse state and the loan is purchase money, then yes, they can sue you for the deficiency (difference between what you owed vs. what they sell for) or they can also issue you a 1099 for the difference if they forgive the amount.

I am not familiar with MI law, but once foreclosure happens there is usually no redemption period and the only way to redeem (should there be something like that) would be to come up with a cash offer to cover the arrears plus legal costs, etc. Furthermore, it is a common misconception that if a house doesn't sell at auction or Sheriff's sale, that it hasn't sold. This is false. The lender puts up the opening bid which is usually the amount you owe. That's the price at which the auction starts. If there are no other bidders, the lender wins the house. Thus lender owns the property.

thanks joe for the clarification...exactly, she need an atty asap, and not necessarily a bk one. anyone would be better than have no legal council at this point and it may be very well to late and the OP be forced into bk...many just don't understand in some states the cost and fees and deficiency's can run into the 100s of thousands forcing their hand into a bk whether that was their intent or not.

many believe because they are underwater, it's simply a good time to way away without realizing or understand the repercussions of their actions or frankly in this case inaction.

i wish the OP the best of luck and hope things work out! thanks again joe!