Mich. Bill Could Cut Foreclosure Redemption Period

Property foreclosure is a situation in which a homeowner is unable to make full principal and interest repayments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as agreed in the mortgage agreement. One month after the homeowner misses a mortgage loan payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner yearns for a mortgage payment, assuming the mortgage is still delinquent, and the home owner has not comprised the missed payments within a specific grace period, the lender will start to foreclose. Typically the farther behind the debtor falls, the more difficult it becomes to catch up since lenders add fees for payments that are 10-15 days overdue.

Each state has its own foreclosure laws in the notices the lender must post publicly and/or with the homeowner, the homeowner's options for bringing the loan current and avoiding foreclosures, and the process for promoting the property. In 22 states – including Fl, Illinois, and Nyc – judicial foreclosure is the norm, meaning the lender must go through the courts to get agreement to foreclose by demonstrating the borrower is delinquent.

If the foreclosure is approved, the local sheriff sales the property to the highest bidder to attempt to recoup what the bank is owed, or the bank becomes the owner and sells the home through the traditional route to recoup the loss. The entire judicial foreclosure process, from the borrower's first, missed payment through the lender's sale of the home, usually requires 480 to 700 days and nights, based on the Mortgage Bankers Relationship of America.

The other 28 states – including Arizona, California, Georgia and Texas – mostly use non-judicial foreclosure, also referred to as the power of sale, which is often faster and will not go through the courts unless the house owner sues the lender.

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