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Archive for December, 2012

What I didn’t Learn in Law School

December 31, 2012 Leave a comment

I recently wrote an article for @earlycareerists about the value of business networking, from my perspective as a lawyer.  It was posted at  goo.gl/fb/7CzVd

Have a Happy New Year!

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Lenders Foreclosing on Residential Mortgages Must Still Offer 90-Day Foreclosure Moratorium: Sunset is Extended to June 30, 2013

December 20, 2012 5 comments

Lenders who were hoping the 90-day postponement on many foreclosure by advertisements would come to an end December 31, 2012 will have to wait another 6 months.

 In 2009 the Legislature created a 90-day moratorium on foreclosure by advertisement to provide borrowers a chance to negotiate a loan modification with their lenders if the property was their principal residence.  Given the apparent stabilizing of the housing market, this program was set to end December 31, 2012. However  on December 12, Senate Bill 1172 was passed by both the House and the Senate- extending the 90-day moratorium on Foreclosure by Advertisement through June 30, 2013.

For more information, see the Legislative analysis here:

http://www.legislature.mi.gov/documents/2011-2012/billanalysis/Senate/pdf/2011-SFA-1172-B.pdf

 

 

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The Benefits of a Short Sale….After Foreclosure?

December 11, 2012 3 comments

A short sale  is a sale of property conditioned upon a bank’s  approval of a reduced loan pay off and its agreement to discharge its mortgage.
In a short sale a borrower owes the bank more than the property is worth. A short sale can make sense for both a buyer and a seller.  For more on buying on the context of a short sale – see my guest article posted on Amerifirst Home Mortgage’s Blog site http://blog.amerifirst.com/amerifirst-blog/bid/87723/Mortgage-Info-Buying-in-the-Context-of-a-Foreclosure-or-Short-Sale

From the Seller’s perspective, does it make sense to pursue a short sale AFTER the bank has already foreclosed on the Property?

The answer is a typical lawyer answer:  It depends.

Although it depends upon a lot of facts which I will not go into detail about,  in the typical scenario it largely depends on who was the highest bidder at the foreclosure sale and what amount was the highest bid.

Let’s say  the Property is sold at foreclosure and the mortgage holder, the mortgagee, (the “Bank”) was the highest bidder – it could take one of two paths:  1. it could get an appraisal and make a “credit bid” for what it believes is the fair market value of the Property.  If the credit bid is less than the loan, and they are the highest bidder, they are entitled to a sheriff’s deed in the amount of the bid, plus the ability to pursue a deficiency judgment against the borrower.  In this instance, a short sale would benefit the seller (borrower) if the bank is willing to waive the resulting deficiency.

However, the value to a borrower of obtaining a short sale becomes less clear if the bank makes a credit bid for the full amount of the loan.  In that case, regardless of the fair market value of the property, the bank could not collect a deficiency – because there is no deficiency. Essentially, the Bank took a gamble – they bid the entire amount of the debt and thought that the property might have been valued at or around its debt. The property may be worth less than the bid amount. Because the Bank bid the entire amount of the debt, the mortgage has been discharged and there is no deficiency balance.

Therefore, it is always the case that in a short sale the property is worth less than a borrower’s loan – it is NOT always the case that at foreclosure the Bank bids less than the amount of the loan.

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