Tag Archives: Foreclosure

How to avoid foreclosure

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By Brenda Long, Michigan State University Extension


Many distressed homeowners had poor experiences during the mortgage crisis, including runarounds and surprises. In response, mortgage servicers must do a better job and comply with the new federal loss mitigation procedures implemented by the Consumer Financial Protection Bureau (CFPB) in 2014. The rules are designed to provide consistent and meaningful protections for borrowers. 


Only the five servicers who were part of the National Mortgage Settlement (See my related articles from April 9 and April 26, 2013) must comply with the CFPB procedures. The five Servicers are Ally/GMAC, Bank of America, CitiMortgage, JP Morgan Chase and Wells Fargo. The new rules do not apply to small servicers and community banks.


Servicers: Before foreclosing by advertisement, these five servicers must now do all of the following:

  • By 36 days after a homeowner misses a payment or cannot pay the full amount, the servicer must make a good faith effort to establish contact by telephone or at an in-person meeting.
  • If the borrower’s situation calls for it, the servicer must tell the borrower about loan modification or workout options available.
  • By 45 days delinquent, the servicer must send a written notice to the borrower encouraging the borrower to contact the servicer that contains the name, address, phone number and e-mail of assigned employees responsible to help them avoid foreclosure. The correspondence must also contain information about how to find a housing counselor.
  • After 45 days late, periodic or monthly mortgage statements must include a “delinquency box,” containing information on the possible risks the borrower faces, the amount needed to bring the loan current, how to find a HUD-approved housing counselor and any loss mitigation programs the borrower has already agreed to.
  • Only after 120 days of late payments can a mortgage servicer make a first notice or filing for foreclosure. This gives the borrower time to learn about workout options and file an application for mortgage assistance. If the borrower has already submitted a complete application, the foreclosure process may not begin while the Borrower is being evaluated for a loss mitigation plan. This provision restricts Dual-Tracking, which hurt many consumers who thought they were working out a resolution with their banks and were shocked to learn of a scheduled foreclosure sale.
  • If a loss mitigation application is received at least 37 days before a foreclosure sale, Servicers must review and respond to the borrower within 30 days. If the sale is more than 45 days away, servicers must inform the borrower if the application is complete within 5 business days of receipt.

Borrowers: The earlier that borrowers seek help, the more protections they have under CFPB rules:

  • Borrowers have the most protections if they submit a complete application for mortgage assistance within 120 days of the first missed payment. The servicer is not allowed to start a foreclosure process during those 120 days. There is no deadline to apply, but the sooner the better.
  • If a borrower submits a complete application 90 or more days before a scheduled foreclosure sale, the servicer must give the borrower at least 14 days to accept or reject an offer of a loss mitigation option. Plus, in this timeframe, the borrower may file an appeal of a denial for any loan modification within 14 days.
  • If the borrower submits a complete application for loss mitigation options 45 days or more before a scheduled Sheriff’s Sale, the servicer must send a written notice to the borrower encouraging the borrower acknowledging the receipt of the application within 5 business days. If the application is not complete, the servicer must tell the borrower what additional information and documents must be provided. If the borrower’s application is less than 45 days before a foreclosure sale, the borrower is not entitled to a written notice that their application has been received.
  • If the borrower submits a complete application 37 or more days before a scheduled foreclosure sale, it will be evaluated for loss mitigation options. The servicer must give the borrower written notice of the decision.
  • When servicers deny a borrower for a loan modification option, they must give specific reasons for the denial for each available modification option.
  • Borrowers who sought help before and were rejected may apply again for an evaluation under the new rules. Their complete application must be filed more than 37 days before a scheduled Sheriff Sale.
  • Consumers may file a complaint about mortgages with the CFPB. Call 855-411-2372 (CFPB) or online at http://consumerfinance.gov/complaint.

Some Michigan State University Extension offices have HUD-approved housing counselors who offer the housing counseling requirement. Find one near you at http://www.mimoneyhealth.org/contact_us to call for an appointment in person, by phone or online. In other areas, find a HUD approved housing counselor. 


This article was published by Michigan State University Extension. For more information, visit http://www.msue.msu.edu. To have a digest of information delivered straight to your email inbox, visit http://www.msue.msu.edu/newsletters. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).

Are you behind on property tax or mortgage payments?

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By Brenda Long, Michigan State University Extension

Some homeowners are still having financial difficulties even though the foreclosure rate in Michigan has significantly declined in recent years with the economy and employment rates improving. All it can take is one large unexpected expense, unemployment or life change. Fortunately, nearly $19 million in funds are still available for eligible delinquent homeowners to get caught up and keep their home.

Bill Hendrian and I have written previous articles about Michigan’s Hardest Hit Fund program, also known as Step Forward Michigan. This federally funded loan program started in 2010 and is designed to help eligible homeowners who are struggling with their mortgage, condo association fees, and/or property taxes to retain ownership of their primary residence. As of September 2018, nearly 37,000 Michigan households in all 83 counties received more than $39 million in assistance, according to MSHDA.

Currently, this is the only statewide assistance program to get caught up on delinquent property taxes. If homeowners are behind three years, on 2016 taxes, they have started receiving notices from their county treasurers about facing foreclosure if those 2016 taxes are not paid by Mar. 31, 2019. Last year, my experience was that homeowners needed to apply to Step Forward Michigan by January to allow for processing time. Situations are reviewed on a case-by-case basis. Most homeowners who procrastinated or did not apply until February or March were not approved in time for this assistance earlier this year. The lesson learned was to apply this fall if you are facing foreclosure with delinquent 2016 property taxes.

Watch a short video for guidance about the Step Forward Michigan application process. The online application can be completed in three ways:

  • Go to the Step Forward Michigan website and complete the application yourself plus email, fax or mail the signed application and supporting documents to Step Forward Michigan.
  • Call Step Forward Michigan at 866-946-7432 to apply by phone.
  • Michigan State University Extension Housing Counselors or other local housing counselors can help homeowners fill out the online application, submit all the required documents, and follow-up until a decision is made. During the past eight years, thousands of Michigan homeowners who worked with our counselors have received assistance to save their homes from foreclosure.

If approved, up to $30,000 is paid directly to the participating mortgage servicer or county treasurer for application directly to the household’s mortgage loan or property taxes. No interest and no payments are required from the homeowner. As cases are reviewed, a lien is placed on the property for five years and 20 percent of the loan is forgiven per year. At the end of the five years, the loan is forgiven. During the five-year period, if the property is transferred, sold, or is no longer the principal residence, the non-forgivable portion is due.

For further information or to see if you qualify for assistance you can go to Step Forward Michigan for a list of frequently asked questions and access an online application and a list of documents that are required to submit an application.

If you do not qualify for Step Forward Michigan, helpful resources are provided to consider other options available.

Facing foreclosure is a difficult financial situation for homeowners. Fortunately many are getting back on track to become current with their payments and keep their homes and stay living in their communities. Find fact sheets and more information about mortgage and property tax foreclosure at MIMoneyHealth.org.

This article was published by Michigan State University Extension. For more information, visit http://www.msue.msu.edu. To have a digest of information delivered straight to your email inbox, visit http://www.msue.msu.edu/newsletters. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).