Michigan Deficiency Judgment

I have an 80/20 loan through 2 different lenders. 

I am 2 months behind and have lost one rental property through foreclosure. 

My questions are:  For a short sale do I need to keep making the payment until the house sells? 

2)What is the statute of limitations as far as deficiency in the state of Michigan? 

Finally, will a deed-in-lieu keep me from deficiency problems and can I get that with an 80/20 loan? 

Thank you SO much!

Doris

———-

Hi Doris,

Answering the first question narrowly – for a short sale to be accepted by the lender, you do not need to make the payments until the house sells.

For question #2, I can’t be the expert on statute of limitations and so I’ll let page 534 of NCLC’s “Foreclosures” 2nd Edition make a generic but accurate statement regarding deficiency judgments in Michigan foreclosure:

Deficiency: A written agreement that personally obligates the borrower is required.  Judgment is limited by the true value of the property, unless foreclosure is by court action.

The deed in lieu is difficult when there are two mortgage loans.  The first mortgage won’t accept a DIL and the second probably won’t either.  The better option is a short sale.  Find a buyer, submit the short sale package to each lender, and condition the short sale on a full release of liability.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.