Facing Foreclosure? What You Need To Know

The Michigan Office of Financial and Insurance Regulation (OFIR) provides the following helpful tips for borrowers who find themselves in this predicament:

• Do not ignore the situation.  The situation is serious and requires your immediate attention and proactive action.
• Read the default letter completely and be sure you understand the contents of the letter.
• Make a note of the telephone number to the loss mitigation department and the name of the representative assigned to your case referenced in the letter.  The employees in the loss mitigation department typically are the only individuals in the mortgage company that have an incentive to find a solution other than foreclosure for your loan.
• Thoroughly review your loan documents - especially the note and mortgage - taking note of the terms of your loan.  For example, prepayment penalty, 15-year, 30-year, fixed rate, adjustable rate, index on which the adjustable rate is set, time frames when the rate can change, the maximum rate, etc.
• Research and write down the dates and amounts of your last twelve payments (available from your checkbook register).
• Evaluate your current budget situation to determine the amount of mortgage payment you can afford.
• Contact the loss mitigation department and discuss your loan situation.  Be sure to understand completely why the mortgage company sent you the default letter.  For example, you are past due over 90 days, you are three payments behind, etc.
• Ask if the mortgage company has begun foreclosure proceedings on your account.
• If you think payments you made are not being posted to your account, explain the dates and amounts of payments made to the loss mitigation analyst.   Request a history of your account to compare to your cancelled checks.
• If you are late with your payments, explain the reasons for late payment status.  For example, loss of employment, reduction in employment hours, medical condition, divorce, family emergency, payment increase on adjustable rate mortgage contract, etc.
• Ask the mortgage company for a written explanation of the funds required to bring your account current.
• Ask if company management would approve any of the following hardship programs: a repayment plan, a loan modification, a refinance, a forbearance agreement, short sale, etc.
• Any written requests mailed to the mortgage company should be by certified mail, unless you fax or email and are able to obtain a confirmation receipt.
• If you are not satisfied by the company representative's response and you believe OFIR might be able to assist you in communications with the mortgage company, contact OFIR at 1-877-999-6442 or www.michigan.gov/ofir.
• You might want to seek legal advice.   Your attorney should explain your rights and provide you with options.
• If you cannot afford an attorney consider the following options: 1) contact Legal Aid listed in the government section of your telephone book by county; 2) contact the State Bar of Michigan at 1-800-968-0738 for an attorney referral; 3) if over age 60, contact Elder Law of Michigan at 1-800-347-5297.
• The mortgage company will probably not accept payments after the default.  Do not spend the mortgage payments. Set up a separate account at your bank or credit union and deposit your mortgage payments.  A lump sum of money will help you with a loan modification or refinance.
• You might want to contact a HUD-approved non-profit housing counseling agency. 
• Do not discuss your mortgage loan situation with anyone advertising that they can rescue you from foreclosure.  These are almost always a scam.  At best you will only delay the foreclosure and eviction by a few months and at worst, you could lose any equity you have in your property.
• Consider selling your property.
• Consider bankruptcy.  
•  If you think there were misrepresentations, fraud, or other violations of law in making the mortgage loan, contact OFIR to file a complaint at: 1 (877) 999-6442 or www.michigan.gov/ofir (select consumer services, how to file a complaint).