Washington, MI asked in Real Estate Law for Michigan

Q: My property was foreclosed I got a satisfaction of mortgage but some how I have a deficiency balance.

I went into foreclosure due to divorce in 2020 my house was sold and I recieved a release of mortgage(from the VP of my mortgage company signed by a notary public) and an account paid in full letter only to find out I had a deficiency on the balance. My mortgage company admitted years later they should of never sent the mortgage discharge letter and I have that in writing does this void the deficiency balance? At closing I was never made aware that there was a deficiency balance either. there was no paper work stating what this balance of $25,000 was for. I was told that since the account was closed and it reflected on my credit that I had to wait until Feb 2023 and I would be eligible to buy a home again. Now I'm finding the mortgage company is giving me the run around and won't tell me directly what this balance is for. They aren't actively trying to collect the balance either they just put it on my credit report. The balance never has been through collections. Freedom has expressed

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2 Lawyer Answers
Kenneth V Zichi
Kenneth V Zichi
  • Fowlerville, MI
  • Licensed in Michigan

A: This is a little more complicated.

Was the discharge recorded? Do you have the written acknowledgment of payment in full? Did you rely on those representations when closing on the transaction? Did you get a 1099 showing the write off?

If ALL of the above is true, you have a pretty good argument that the mortgage company cannot come after you for a deficiency. If MOST of the above are true you still have a chance — just not as certain.

However, the real take away here is you need a licensed attorney to review all the documents and situation to provide you with real advice. This is a ‘shoot from the hip’ first impression and not real advice!

Get legal representation now — you should have had a lawyer review this in 2020 but now is better than nothing!

Anthony M. Avery agrees with this answer

1 user found this answer helpful

David Soble
David Soble
  • Farmington Hills, MI
  • Licensed in Michigan

A: The discharge, if done in error, does not change the status of your loan deficiency. However, the mortgage lender would need to file a notice with the Registrar of Deeds that the discharge was not effective. If you need more information, see ProvenResource.com.

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