We are in Michigan and are planning on moving out of state next year. We can try to sell the house, even go for a short sale...but if things don't happen as we hoped and we have to abandon and go into foreclosure, can the lender garnish my husband's earnings? One person told me that the mortgage lien is towards the home so wages can not be garnished but then again, someone say they can. I understand that a judgment needed to be issued first.
Has anyone gone through foreclosure in MI?
Are the laws different if you foreclose and stay in MI vs foreclose and move to TX ( supposedly a no garnishing state. Not sure if that only applies to Tx property foreclosures)
Please look into the new federal programs that help with selling a house or refinancing. And yes - wages can be garnished by a lender in Michigan. Will they with the new federal programs... who knows. But yes, they can. And no, the law does not change depending on where you move. You're still subject to MI's law.
Yes they can garnish wages & they should......people shouldn't be able to CHOOSE to walk away from their obligations......it's one thing if you truly had a catastrophe & cannot meet your obligations but it's another to choose to walk away. The "NOTE" you signed at your closing will show you that you are legally obligated to pay back this loan, refer to that document & call an attorney. Work with your lender now rather than later.
Any chance you could rent your house out so that you can keep it instead of have it forecosed?? Thats one option I haven't heard you mention. Its not fun, but its much more financially sound and a way to honor your responsiblities.
I reviewed your last question. It is clear that you do not NEED to move, and that you are not in financial trouble. I think what you really want is to get out of your house because you feel that it is no longer an investment. Your bad decision on when to buy does not release you from responsibility. You also state that you have a comfortable living, so there is absolutely no reason for you to not pay your bills.
D.:
Instead of going into a short sale or a foreclosure - rent the house out. Don't just walk away from the property....it affects more than just you. I don't know nor do I understand the sheer ignorance of people who do this...sorry - not trying to be mean here but really?! This is a debt that will follow you...you are legally responsible for it...doesn't matter if you live in Timbuktu - it is YOUR DEBT.
I don't know the laws in Michigan - but I can tell you that it would NOT be wise of you to foreclose on the property ESPECIALLY if you have been making payments. If you have not been making payments - then find out what you can do or if there is a program available to you to help you out so you can avoid foreclosure.
If you walk away and foreclose - your credit will be tarnished for AT LEAST 7 years...YES they can garnish wages and tax returns. YOU WILL STILL BE HELD RESPONSIBLE FOR THE DEBT!!! So instead of messing up - lease or rent it out.
As it stands, you state you plan on moving to Texas in the next year. Fine. Put it on the market NOW and start trying to sell it. If you cannot sell it - rent it out. The ramifications for foreclosure are not just about YOU - the affect everyone around you - your neighborhood, your community and everyone else that owns a home. if you can avoid it - do.
I know stuff happens. Job loss, etc. okay - got that - but really - if you are making your payments, there are programs out there to help you....don't just walk away from it. It WILL follow you. it IS your debt.
I would suggest renting out your home and going with a property management company to oversee this. GL.
Don't ever plan for a foreclosure if there is anything else you can possibly do to avoid it. You said you're not even planning on leaving until next year, so why don't you put your house on the market now?
You do understand what a short sale is right? Foreclosures will stay on your credit report for 7 years. Have you been making the payments on the house?
To answer some of your questions, Yes they can garnish wages and why wouldn't they? Just because they foreclose on the house does not mean you aren't responsible for whatever the lender is out. I'm always amazed that people feel that they can walk away from their obligations.
Doesn't matter where you move, you are subject to the real estate laws of Michigan. Texas has a "Homestead" provision. That has to do with bankruptcy not foreclosures.
To answer your question you borrowed the full amount of your mortgage so you owe all that you borrowed. Yes your home is held as collateral but if the sale does not cover the balance the remainder becomes unsecured but still owed.
Something you may want to consider is the work involved in selling a house. Do you really think the lender, if forced to sell, is not taking all fees out of the sale price before applying to your mortgage balance. So you will end up paying them another maybe 10 to 15 thousand to do you the favor of selling your house as they should.
I guess what I am saying is you think walking away is the easy way out and it is not. Yes they can garnish so your new employer or current if this is a transfer will know you are deadbeats. Not really something you want them to know is it? You will still owe the money, your credit will be destroyed....
A short sale is different from a foreclosure. Both will stay on your credit report for at least 7 years, some take longer to get off the report. If you are making regular payments then the bank may not want to consider a short sale. This is when you ask a lower price and the bank has to also approve that price. It could take months for the bank to even look at it, at which point if you are not making payments the house will go into foreclosure. The bank can sue you for the money either way, all of the balance if it is a foreclosure or part of the balance in a short sale. Either way it depends on the bank, they may not want to spend the money right now for court fees and such but they could do it in the future.
Sounds like you need to make an appointment with a real estate lawyer to discuss your concerns. They will charge you an hourly rate, but with something this serious it's worth it to get REAL advice.
When someone I knew lost their house the bank took over and they had a Realtor come in a fix it up, made it rather neutral (I thought the new color scheme was WAY ugly myself) and the bank sold it. It actually happened to sell for more than was owed and I am not sure how it worked out but my friend did not make any money on the sale.
My advice would be to start now, fix up some room each month. Go for the neutrals in color choices, creams, tans, light colors that could sustain any new furniture and decorative style. Then when you have made good progress put it on the market. If you sell early you can always rent a small apartment and keep everything in storage except a few clothes and main pieces of furniture. If you do it early enough you can always keep the price high then come down as school gets close to getting out when is when most people tend to move and buy houses.
