Michigan foreclosure process

Michigan’s foreclosure process 

Everybody watches late night TV and sees the infomercials on how people made millions buying bank foreclosures (some of them are Michigan foreclosures).  So Buyers think they can do it without experience or money!  With today’s economic conditions and mortgage guidelines it is possible but banks have closed many of the loopholes in the lending process.
      Here is what happens in the Michigan foreclosure process.  How does it happen in your state?  A homeowner falls 3 or more payments behind on the mortgage.  The bank then sends them a letter that they are going to start foreclosure proceedings against the homeowner.  Sometimes the banks are very quick to get a letter out and start the foreclosure proceedings.  Other times some banks take months to get the Michigan foreclosure process started.
     Then it is usually turned over to a foreclosure attorney to handle.  The house is then scheduled to be sold at a “sheriff sale”.  The home is auctioned off.  Unfortunately many people think you can steal the homes at the sale.  There are deals there at the sale but you have to do the research on the homes and their value.  But what usually happens is the bank will buy the home back.  The reason they do this is because they have a mortgage on it.  Let’s say the house is worth $120,000 and the homeowners owe $100,000 on a mortgage.  The bank will buy it back up to the $100,000 to recover their costs and to get the other possible liens off the home.   You could buy it for $101,000 or more and the bank would probably let you buy it.  If the mortgage was $90,000 then the bank would bid up to $90,000 to keep their interest in the property.  So up to this point the only way you can get a deal on the property is to out bid other buyers on the Michigan foreclosed home.
      Now the bank owns the home.  The original owners may still be living in the home.  They have up to 6 months to pay the bank the full amount to keep the home.  This seldom happens.  The people can actually still live in the house and not pay anything and the bank can’t kick them out until the six months is up.  So sometimes these people live in the house for up to a year and not pay a dime!  Sometimes the bank offers to give them $500 or $1000 to get out of the house and release all rights to the home.  The bank does this to get the sales process started quicker.
      The bank usually waits for the six month redemption period to lapse because the owner has the right to come up with the money and buy the house back.  Usually right away the bank has contacted 3 different real estate agents.  The bank will ask the three Michigan Realtors give them a price that the house should sell for.  The bank is asking the Realtor for a price, that price usually is fair market value in the eyes of the Realtor.  So that foreclosed home is no deal in the beginning.  It is around fair market value for its condition.  The bank then hires a Realtor to change locks, winterize the home, clean carpets, and if necessary get the home in saleable condition. 
      So the bottom line is that the bank is trying to recover what they are owed on the house or get fair market value.  They are not giving the property away.  So some homes that are foreclosed are not always great deals.  Though there are some fixer uppers that may be deals.    There also are HUD foreclosures that go through a little different process.  There may be deals in them.   
      The key to buying homes cheaply is to know values of the neighborhood and city and look for fixer uppers or homes below market value.   Though some banks in the metro Detroit area are starting to bargain better and dump some of the properties because they have to unload the inventory.  Banks like to sell the foreclosed homes within 30 to 90 days.  So making a low offer on bank owned properties make get a buyer a low priced home.  Sometime homes that the people have relocated and have to sell are better buys.  Or a divorce situation where they want to dump the home.   To look for more deals in Michigan foreclosures or Michigan homes for sale go to my website www.russravary.com  To search Michigan foreclosures or search Michigan homes for sale go to my website www.DetroitMichiganRealEstateHomes.com

May your families health problems take a turn for the better this week.  Russ Ravary