Know your redemption rights!

We were contacted by a loan officer who had a friend facing foreclosure. The loan officer knew we were foreclosure specialists who helped many distressed homeowners through the foreclosure process, so she contacted Lois for advice. She told Lois, “I know there’s nothing that can be done to help save my friend’s home, but I wonder if you could take some time with his wife to help get her through this final stage?” The couple was actually in the process of packing and needed to be out in a couple of days. Initially, we were convinced that the couple had waited too long to act and had severely limited their options, but we agreed to meet with them anyway. The couple came in that same evening with the paperwork that Lois had requested —the notice of foreclosure, the mortgage, the deed, and anything else they thought would help.
In preparing for the meeting, we did our own research and discovered that this was a nice, older farmhouse that sat on about 3.3 acres of land, a seemingly minor detail that would become critical in this particular case. As Lois reviewed the documents, she immediately discovered a pleasant surprise for these worried homeowners. The foreclosure notice claimed that the redemption period was six months. In Michigan, however, the redemption period for any property on a parcel of land that is more than 3 acres is actually 12 months! As soon as Lois discovered this key piece of information, she stepped out of the room to verify with an attorney that these homeowners had a valid point for contesting the foreclosure. (You should always double-check your hunches and the information you have on hand.) Sure enough, the attorney agreed that the lender was at fault.
When we broke the good news to the homeowners, they couldn’t believe it. We advised the couple to hire an attorney who was familiar with the foreclosure process. He took up the charge to inform the lender and the lender’s attorney of their mistake. The lender had to begin the process all over again from scratch. That meant that this couple would have a total of 18 months to live in the house free — the 6 months they had already lived there, plus the 12 months they would have from the time that the bank initiated the process anew.
We now had some bargaining power. Ultimately, we were able to pay off the homeowners’ mortgage for less than what they originally, and the bank seemed pretty happy to get the money.
Remember: Knowledge is power. Don’t just assume that everything the lender and the lender’s attorney tell you is correct. If the bank makes a legal error in your favor, don’t hesitate to take advantage of it. You may just be able to save your home!