This is my first post but I have been a lurker since late 2006. Here's my story, hubby bought a house in Michigan in December 2004 for $117k with crazy 9.54% adjustable rate with a monthly payment of $965.00 without tax and insurance. The rate went up to 12.54% in January of 2007 and the monthly payment went up to almost $1300.00 a month. The house was built in 1893 so it needed updates and the first we updated was the windows, the house has like 30+ windows that we replaced for $13k financed by Hansons Windows of Ohio and they later sold it to First Consumer Credit of Texas. We need those energy efficient windows because the previous windows were only single pane and our gas bill was as high as $650+ during the winter plus the insulation is not good. After 4 months we tried to refinance, they initially quoted us for 8.6% interest for abt $850+ monthly payment but later declined because the value of the house was not enough for the loan amount because they have to payoff the $13k lienholder. Fast forward to 2007, the rate adjusted and it was nearly impossible to for us to keep up with the mortgage payments and adding to all the worries hubby's working hours was cut off (he worked for Ford). due to all the uncertainties on his employment, he took the buyout and went back to school in another state (FL) in July 2007 and that was also the month of our last mortgage payment, we cant pay for both our rent here in FL and the mortgage, taxes and insurance in MI. The house was listed for sale since May 2007 but no luck. they began foreclosure in November, we have not received any notice we only found out through the county records that there was a sheriff last January 3, 2008 and our redemption period is until July 3, 2008. We were still trying to sell but the house only had 2 viewings since June 2007 :-(. Obviously we don't own the house since the July 3 redemption date has already elapsed. They sold the property for $121k to Lehman Brothers (which is already gone now) and our loan amount was $115k+. We have not heard or received anything from them. What happen to our $13k loan that had a lien in the house? we're still actually current on it and still paying for it because we don't want them to file judgment against him (both loans are only DH's name). We are current on all of our bills at the moment, the only latest derog on his credit is the foreclosure.
Sorry for the long post I hope somebody will have the patience to read this, lol and give us advise.
Thanks.
Koshi
IN MI they can come after you for the balance........so while the lien was wiped out in the foreclosure your underlying debt was not.
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To expand on this topic I too had a second lien that I would like to know what happend. I filed BK in 2004..I had a 2nd15k lien on a rental house it went into forclosure the 1st way into forclosure. But I redeemed the 1st..now current ..the 2nd was discharged through the BK never heard from them again..credit report shows the 2nd was charge off but then "paid in full" and zero balance. I went to to the courthouse to research ...my second was transferred to another lender during the whole thing. However the new lender has never contacted me about the lien..I know the debt was discharged but I also know they could enforce the lien. So now I am going on 4 years and no contact about it...the 2nd mortgage was a 15yr note taken out in 2001 ..so if there is no collection by 2016 does the lien expire then or sometime before? Complicated enough? I dare call and ask the lender I assume they may think I lost the house in a forclosure through thr BK..so I am just letting it lay there...and suggestions? ideas?
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IN MI they can only come after you for the balance on the second mortgage IF they sold it at Sheriffs sale to someone OTHER than the bank and ONLY if it sold for MORE than market value. If it sold for less than market value then they can NOT come after you.
I was in a Federal Lawsuit over this very issue when DW and I sued a mortgage company and received a huge settlement. So it depends on your circumstances. Usually when the first lien holder forecloses the second gets wiped out.
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Not sure about original poster but we had a home loan in MI and a 2nd. In our loan document for the 2nd they could become an unsecured creditor and come after just like a personal loan. We filed BK.
Tammy
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Not sure about original poster but we had a home loan in MI and a 2nd. In our loan document for the 2nd they could become an unsecured creditor and come after just like a personal loan. We filed BK.
Tammy
Then I would opine each poster look through their documents. There was no such clause any of our mortgages so as such the 2nd was extinguished when the first foreclosed because they paid under Market value for the house. MCL 600.3280
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Thanks for the replies guys, but anyway, there's no such clause in our documents that our loan will be converted into an unsecured loan.
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Forgot to ask in my previous post, what is the basis of the loan deficiency amount? Is it based in the highest bid during the sheriff sale? The highest bid was made by the bank during the sheriff sale for $ 124k+++ which probably constitutes of our loan balance plus the fees.
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If the bank purchased the house at Sheriff sale for the amount plus the fees then you owe them nothing. It is just like another party coming in and buying the house, all the bank was doing was securing their lien.
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The mortgagee selling a foreclosed home for less than FMV is a affirmative defense for the mortgagor. It wasn't found in your closing documents but in the MI statutes.
Obviously you had legal counsel that sued and won the case for you.
MI is definitely a recourse state and mortgagees can sue for a deficiency balance. If they do the mortgagor has the less than FMV defense, improper notice defense and filing a bankruptcy.
So do not assume facts not in evidence or that your outcome is the word from the burning bush. It was a trial winning defense...period.
savemanatees
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IF you bifurcated the mortgage in your bankruptcy between the secured portion and unsecured portion it is entirely possible the second mortgagee was wholly unsecured therefore was discharged along with all other unsecureds.
Lien stripping on primary residence mortgages can not be done in a 7 BUT can be done on rental/investment real property.
Therefore if you look at your filing you might notice that the second was wholly unsecured and thus totally slam dunked. This would make any lien claim null and void. I'm assuming this was a loan on a house that was NOT your primary residence at the time of your filing.
HTH,
savemanatees
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The mortgagee selling a foreclosed home for less than FMV is a affirmative defense for the mortgagor. It wasn't found in your closing documents but in the MI statutes.
Obviously you had legal counsel that sued and won the case for you.
MI is definitely a recourse state and mortgagees can sue for a deficiency balance. If they do the mortgagor has the less than FMV defense, improper notice defense and filing a bankruptcy.
So do not assume facts not in evidence or that your outcome is the word from the burning bush. It was a trial winning defense...period.
savemanatees
Actually I sued myself thank for the vote of confidence. And to correct you MI is not a recourse state IF THE BANK BUYS THE HOUSE AT SHERIFFS sale. I believe it is you whom should not assume you are always correct because in this case you are NOT.
There are many different ways the 2nd could come after and there are many different ways they can't. I am not going to list each and every single one. However, suffice it to say my record on this issue is strong and I am correct in my logic and facts. Should you wish to point ALL of the MI foreclosure laws I would be more than happy to read them but I already know most of them!
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Savemanatees,
Thank you for this advice..so if it was considered unsecured through my Chapter 7...and it was a rental house..then maybe the lien isn't valid? I will call my attorney tomorrow to pursue...since the lien is still filed against the property are they under any obligation to release it since it was unsecured ..it was a 125% mortgage..or may I just need to wait till 2016 when the mortgage expires?
Thanks
apnumber4
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MCL 600.3280 states to wit:
REVISED JUDICATURE ACT OF 1961 (EXCERPT)
Act 236 of 1961
600.3280 Foreclosure by advertisement; deficiency; defenses.
Sec. 3280.
When, in the foreclosure of a mortgage by advertisement, any sale of real property has been made after February 11, 1933, or shall be hereafter made by a mortgagee, trustee, or other person authorized to make the same pursuant to the power of sale contained therein, at which the mortgagee, payee or other holder of the obligation thereby secured has become or becomes the purchaser, or takes or has taken title thereto at such sale either directly or indirectly, and thereafter such mortgagee, payee or other holder of the secured obligation, as aforesaid, shall sue for and undertake to recover a deficiency judgment against the mortgagor, trustor or other maker of any such obligation, or any other person liable thereon, This section shall not affect nor apply to the rights of other purchasers or of innocent third parties, nor shall it be held to affect or defeat the negotiability of any note, bond or other obligation secured by such mortgage, deed of trust or other instrument. Such proceedings, as aforesaid, shall in no way affect the title of the purchaser to the lands acquired by such purchase. This section shall not apply to foreclosure sales made pursuant to an order or decree of court nor to any judgment sought or rendered in any foreclosure suit nor to any chancery sale heretofore or hereafter made and confirmed.
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I am more than capable of reading. It is you who is incapable of admitting your incorrect. As I SAID there is MORE THAN ONE MI STATUTE. do you live in MI? I highly doubt it. I have been through this, you have not. I am not going to argue with you. I know the law and your snide remarks are uncalled for and I would suggest you stay in the BK forum. ANYONE and I REPEAT ANYONE can quote MI statutes. UNDERSTANDING THEM is a totally different thing which YOU DO NOT!!!!
I am not here to hand feed everyone. I know what is correct and what is wrong. You are wrong and just fail or refuse to see and/or admit it and wasting my time (which is valuable) on this post arguing with you is without merit and a plain waste. So go ahead and quote statutes. Any person with half a brain is able to do that.
As I said before I HAVE BEEN THROUGH THIS and by myself and in FEDERAL court. So I would suggest you quit while your ahead if you know how to (which I highly doubt considering your FIRST remarks).
Since you seem UNABLE TO READ I will repeat myself and maybe you can comprehend this.
THERE IS MORE THAN ONE FORECLOSURE STATUTE IN MI!!
THE TERMS OF THE MORTGAGE FALL INTO PLAY. (Are they all the same NO!!!)
DOES EVERYONE HAVE THE SAME NOTE AND MORTGAGE? NO!!!!
THERE ARE MANY DIFFERENT AVENUES AS STATED IN THE FIRST POST!
AND IF THE BANK BUYS THE HOUSE AT SHERIFFS SALE THEN THAT RELEASES THE MORTGAGER!!! CARE TO QUOTE CASE LAW?? I CAN BECAUSE I AM IN MI AND HAVE BEEN THROUGH THIS...
Get back to the BK forum!
ETA: You are on ignore because I see no reason to waste valuable time reading your responses which I can likely read in my MCL books from West!
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So someone challenges your opinion.....because that is all it is and you resort to name calling, insults, screaming caps and telling me where I can post or not post.
She didn't seem to think that living in MI was paramount in giving advice.
Tammy lived in MI.....and lived through a foreclosure. I was helping her in the bk forum way back when.
You have displayed zero knowledge.....you asked for the MCLs. I posted them. You cited a MCL that supported a post I had made earlier. So get your facts and understanding of the laws straight. You are wrong and so just admit it.
Kiss my grits.....go back to General and talk about the weather!
OH WOW......big time edit! Surprise, surprise you deleted 50% of your post. PLUS you used your forum lead powers to hide the fact you radically edited your post. Whoo-hoo.....you're nothing but a big woosie.
BTW I have every right to post in this forum. AND yes foreclosures come up plenty in bk filings. DUH!
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Sorry Koshi your thread went OT.
The deficiency amount is the difference between what was owed and what was paid off at time of sale. If the junior lienholder was not paid in full they can bring a deficiency lawsuit against you.
Your options are few. You could try using the FMV defense but it seems the senior mortgagee got more than you owed them and some for the junior. So it might not fly as the RE mkt in MI is in pretty bad shape.
You could continue paying.
You could file bk BEFORE they get a judgment and discharge the debt as unsecured debt. The Circuits are split on this practice as junior lienholders if they're secured by $1.00 must be paid in full. But you voluntarily surrendered the house so the debt remaining should be dischargeable.
IMO, you should get some good self education on the bk process. Consult an atty or two or three (first consults are usually free). It seems a big waste of income to be paying on a foreclosed house.
HTH and sorry for the OT meandering.....but that MI resident is WRONG. You ARE vulnerable to a deficiency lawsuit in MI. A judgment lien attaches to both present property, real or personal, and any future acquired real property. Judgments in MI survive for 5 years if not satisfied and can be renewed for 5 years.
The interest rate on the judgments are adjusted twice a year. On January 1st and July 1st. Right now the interest rates are low with the last adjustment on July 1st ~ 4.08%.
If you have any further questions....please feel free to ask. There are no stupid questions....but there can be very wrong answers. So it is best to consult with a competent atty.
HTH,
savemanatees
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Yes, mortgages on second homes or investment properties can be bifurcated in a Chapter 7. The house should have been valuated....but it seems at 125% LTV the second was wholly under water and therefore dischargeable.
You will prolly have to bring a judgment vacate action in order to get the lien released. This is not difficult as it just involves a short motion attached to the relevant bk filing forms...Creditor Matrix and Discharge papers.
HTH....sorry I lost you in all the ruckus,
sm
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What you will find is FMV adjusted to the sale price of the house or below- and the deficiency suit will commence.
FMV is undefined in the statutes, judges have been taking some leeway with it. The housing market in MI is so hosed it's tough to put a valuation on property in some areas.
There is tax-sale property out there for $1+ back taxes that goes unsold. I was just looking at property in one U.P county that was being - literally- with no takers. What is FMV when you can't give something away?
It's not tough to make an argument in certain counties that the house + property is valueless or close to it. It can't be sold to anyone- at any price.
What they've been doing in MI when other methods fail is using the SEV, State Equalized Value to set the FMV of the house for this purpose. The SEV is normally 50% of the value of the home as of the last tax appraisal, but even those values are suspect as values have fallen so far so fast.
You'll need a good atty, or an uncommonly good understanding of the law and the MI RE market to use the FMV defense- the courts have been using some pretty lowball values.
I would appreciate it if there was no further flaming, grandstanding or other unpleasantness in this or any other forums. We can disagree without being disagreeable, and realize that no single person knows everything nor are they expected to.
If you cannot- then please refrain from posting here until you can.
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What you will find is FMV adjusted to the sale price of the house or below- and the deficiency suit will commence.
FMV is undefined in the statutes, judges have been taking some leeway with it. The housing market in MI is so hosed it's tough to put a valuation on property in some areas.
There is tax-sale property out there for $1+ back taxes that goes unsold. I was just looking at property in one U.P county that was being - literally- with no takers. What is FMV when you can't give something away? :lol:
It's not tough to make an argument in certain counties that the house + property is valueless or close to it. It can't be sold to anyone- at any price.
What they've been doing in MI when other methods fail is using the SEV, State Equalized Value to set the FMV of the house for this purpose. The SEV is normally 50% of the value of the home as of the last tax appraisal, but even those values are suspect as values have fallen so far so fast.
You'll need a good atty, or an uncommonly good understanding of the law and the MI RE market to use the FMV defense- the courts have been using some pretty lowball values.
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Sorry wasn't able to log in the past several days, but I really appreciate all the advice. Yeah, it's really a waste of income to pay for a property you don't own anymore. DH and I are still talking on what we should do with this loan. One of the alternatives we are thinking is that we will try to negotiate with the lender if they are willing to settle for less than the amount of the outstanding loan.
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Hello,
I know this is an old thread but I have similar issue so I am just hoping that some one will take a look and provide some insight.
I file BK 13 back in 2009 to save my primary home, however, my home was foreclosed in 2010 and my BK was amended to reflect. AT that point I tried to see if i can qualify for BK 7 to wipe out my debts and start fresh but my lawyer said it was not possible. I think he said my income was over the limit (probably by 100s of dollars). I hate to make a statement like this but he almost sounded like he was working against me. So I continued to make my payments to the trustee at 70% for the past 3 years. This past Friday I went to my lawyers office to surrender the little tax refund that I was getting to the Trustee and my lawyer said I have some news and handed me a letter from a law office indicating that they are planning to file motion to convert or dismiss my BK 13 since the junior lien was not included in my BK. My lawyer said I might qualify for BK 7 now that I am married. However, after 2 years of rebuilding my life after the BK and the FC filing chapter 7 at this point is the last thing I want to do. I spoke to an attorney that I know through a friend and he flat out said the attorney screwed my case. My lawyer said he would contact the lender’s attorney on Monday since it was Friday afternoon and people may not be available. To my surprise he had received the letter 4 days prior to office visit and I was not contacted at all. The attorney I spoke to told me to not say anything and wait for his response and to also not contact other attorneys until I hear what he has to say.
I live in VA and not sure what the law here is in regards to what I being sued for and I would apperciate it if any one can give me any advice on what to expect and etc.
Thanks,
Hope