Hakuna Matata, Other/Just Looking in Pleasant Ridge, MI

Foreclosure: Michigan Redemption Advice

Asked by Hakuna Matata, Pleasant Ridge, MI Wed Aug 18, 2010

My mortgage payment was very manageable; however, necessary costly repairs coupled with deteriorating market value prompted strategic default. I found myself in a position where I couldn't afford to invest considerably into a losing investment nor did I have the desire to do so.

My house went to auction in June. I owed $110k on the mortgage (single loan) and I've been told the bank purchased the property at Sheriff's Sale for $21k. I've been approached by numerous random individuals who have offered cash incentives in exchange for a Quit Claim Deed. Apprehensive about their intentions, I've declined. I was approached by an alleged realtor today who presented a similar scenario. Consequently, I've commenced my own personal research.

How do I properly ascertain redemption value for my house? Is this cost strictly linked to the Sheriff's Sale purchase price (including taxes, attorney fees, etc.) Does it exclude associated costs of the former mortgage loan?

Help the community by answering this question:


Bob McClure’s answer
hi again...first of all..suggesting you work with an attorney is something that most all of us feel necessary to suggest as a disclaimer because, even though many questions here can be answered properly they cross the line into legal advice...which many of us are not able to give not being a licensed attorney...
also..i know you are researching your options...but, please tell what you want to do..i am not sure i know what that is..
thank you.
bob mcclure
mortgage one
brighton, michigan
0 votes Thank Flag Link Thu Aug 19, 2010
Thank you Bob and Jay! Your advice is greatly appreciated.

I've continued to occupy the property. I contacted the Register of Deeds today to confirm the Sheriff's Sale bid. I also contacted my lender's attorney to ascertain the cost to redeem. I am utterly dismayed that I could potentially profit from this scenario!

I've been given the redemption cost (which is less than I had anticipated). I have the opportunity to own a house outright for a cost similar to that of a car. I also have the opportunity to sell and profit.

Bearing this in mind, do you still recommend working with a real estate attorney? If so, why? Also...how would the potential sale of this house be deemed a "short sale". Since the original loan value is no longer at play, am I not simply looking to satisfy the cost of redemption?
0 votes Thank Flag Link Thu Aug 19, 2010

You need to consult w/ a real estate attorney. Don't do anything until you have done that. Also look into putting your home onto the market as a short-sale--assuming you are still occupying it. If the home is vacant, you'd better get it occupied fast, as the bank will accelarate the redemption and all your options will be decided for you, as you will have none at that point. Good luck!
0 votes Thank Flag Link Thu Aug 19, 2010
good morning...first of all...as mentioned below...after the sheriff's sale, there is no more mortgage..there is a sheriff's deed...there are no more back payments, or late fees to catch up on...that's all gone...the sheriff's deed must be redeemed...also...foreclosure redemption in michigan can go more than six months depending on certain circumstances, however, your's probably is six months......anyway...do not sign a quit claim deed to anyone....you have the time to do something in your own best interest without feeling pressured to react simply because you are being pushed to do so...i have done low and higher risk mortgage financing in michigan for almost 16 years and would be glad to discuss your options with you...
best regards
bob mcclure
mortgage one
brighton, michigan
0 votes Thank Flag Link Thu Aug 19, 2010

I haven't a clue how to respond to your thorough message (thank you!). Due to character restrictions, I was unable to offer full background information on my situation. After discovering my house needed significant repairs, I knew I had to devise a plan. I channeled my inner business sense. Maintaining an emphasis on integrity, I filed for bankruptcy to LEGALLY remove my obligation from my mortgage loan. My mortgage wasn't reaffirmed. I cannot be held accountable for any deficiency. Surprisingly, my credit hasn't tanked as terribly as expected (likely due to having only missed a few recent payments in my lifetime coupled with a quick filing). While my score was above normal, it settled into the mid-600s within months of discharge.

I appreciate your information on DJs and I'm sure this will benefit others. I, too, suspect we will begin to see more of these in the future. I'm grateful I don't have to maintain this worry.

I've received conflicting information pertaining to redemption costs; and, I remain confused especially since my lender's purchase price was grossly less than the mortgage loan. What is the significance of the Sheriff's Sale price to someone in my situation (not subjected to a DJ)? If I were to redeem, does the original loan value come into play? Or, is the redemption price tied exclusively to the Sheriff's Sale price (with interest and other exciting monetary flair)?

How would someone benefit from a Quit Claim Deed? If I were foolish enough to let someone "assist" me, would they simply be purchasing redemption rights? The house potentially has profit, if we reflect on the Sheriff's sale cost. Are such people looking to sell the house, pay off the lender, and live happily ever after? I'd love to be informed when these scammers knock on my door!

Thanks again!
0 votes Thank Flag Link Wed Aug 18, 2010
Hi Hakuma,

You should easily be able to find out the amount for which the lender purchased the house at the sheriff's sale by contacting your county clerk's office. The difference between the amount of the sheriff sale purchase and the amount you owe on the defaulted mortgage is the amount for which the lender may seek a deficiency judgement. They will have 6 years in which to seek this judgement and seek reimbursement from you. Obviously, your credit record will be dramatically impacted for the next many years as well.

In Michigan you have 6 months from the date of the sheriff's sale in which to "redeem" the property which basically means that you can pay the back payments, fees, etc. that are due and then be able to continue with your mortgage. You have likely been receiving formal notices telling you the amount that is owed. If you are truly interested in redeeming your property, I suggest you consult a good real estate attorney.

You are correct to be suspicious of those seeking to "help" you by having you sign a Quit Claim Deed. I see absolutely no advantage to you in doing so. Your deficiency has been determined by the amount of the purchase at the sheriff's sale. If you are seriously contemplating such a move, you should seek the advice of a good real estate attorney.

Unfortunately, although you decided to strategiclly default on your mortgage obligations, you may find yourself looking over your shoulder for 6 years waiting for the lender to seek reimbursement for the defaulted amount. There have been a number of publications indicating that lenders are anxious to make examples of those who have strategically defaulted on their mortgage obligations.

This is a very complicated situation and you will be unable to receive full and complete information from this type of forum. This is the time to seek assistance from a real estate attorney if you are truly concerned.

Best of luck to you,

Shirley Coronado
0 votes Thank Flag Link Wed Aug 18, 2010
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