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Information About Detroit Michigan Home Foreclosures

Michigan Foreclosure Overview

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Houses for sale on block in Detroit (2/08)

Houses for sale on block in Detroit (2/08)

Photo by Bill Pugliano / Getty Images
Updated August 13, 2010
With a general downturn to the national economy and the bankruptcies of General Motors and Chrysler, many Detroiters are struggling to keep their homes. That's why it is important to get information about Detroit Michigan Home Foreclosures.

Note: The information contained herein is for general information only and is not legal advice.

Statistics

According to the Free Press, Michigan rated fourth in the nation for mortgage foreclosures in September of 2007. Michigan’s economic woes are partly to blame, especially the recession in the auto industry that resulted in layoffs across the state. Of course the factors that are responsible for a rise in mortgage foreclosures across the country are also at work in Michigan, including the prevalence of sub-prime loans. Adjustable-rate and interest-only mortgages also caused many homeowners to get into houses they really can't afford.

Michigan Economy

In addition to the immediate effect to the homeowners in foreclosure, there are some unavoidable effects for the state:
  • During any economic recession, there are always some opportunistic businesses that flourish. During a rash of foreclosures, the obvious industry for growth is real-estate investment. Betting in favor of Michigan’s economic turn around, investors can buy property relatively cheap to either flip or rent. This brings us to the other consequence of a high foreclosure rate: a relative glut of people needing to rent after losing their houses increases business for both landlords and property management companies.

  • According to an article in the Daily Tribune on October 29th, 2007, the rise in foreclosures may have a cyclical effect on Michigan as property values drop and property tax revenue dwindles.

The Foreclosure Process in Michigan

In Michigan, there are two different processes by which a lender can foreclose: judicial action or advertisement. For residential property, lenders most often use foreclosure by advertisement, which is contractual in nature and governed in part by the terms within the mortgage document.

A detailed description of this process can be found in the Timeline to Michigan Foreclosures by Advertisement. Generally speaking, a foreclosure by advertisement starts when the homeowner defaults on their loan payments as defined in the mortgage document. The lender can then begin the foreclosure process by setting a date for a foreclosure sale and posting notice in a local newspaper and on the premises. The sale of the property at the foreclosure sale is not the end of the story, however, because the homeowner has a period in which they can recover or "redeem" the property by paying the amount it sold for at auction, together with interest and certain costs.

This out-of-court process can work to a homeowner’s detriment because many homeowners believe a judicial action is required before they can lose their home. As explained above, the foreclosure by advertisement process can begin much more insidiously. Couple this with a reluctance on the homeowner’s part to talk with the lender when no solution is readily apparent, and the foreclosure process can be much further along than a homeowner knows.

Lender Contact

Therefore, it is important for a homeowner who has fallen behind in their mortgage payments to open their mail and keep in touch with their lender. In this way, they may be able to make a work-out agreement. In fact, most lenders have an entire loss mitigation department exactly for this purpose. At the very least, the homeowner will be aware of where they are in the foreclosure process.

Mortgage Counseling

A homeowner can also contact a mortgage counselor as soon as possible upon missing a mortgage payment. Be wary, however, because even Money Magazine has a “how to” article regarding how to snap up property in default. Not every company advertising itself as a “mortgage counselor” should be trusted. Both the Michigan State Housing Development Authority and the U.S. Department of Housing and Urban Development (HUD) have a list of counselors.

Michigan Government Proposals to Help Homeowners

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