Q: Is it legal for servicer to foreclose after insurance payout in MI?
My mortgage servicer foreclosed on my property in Michigan after receiving a full payoff check from my insurance company for a total loss due to a fire on January 16, 2023. The insurance check was issued on August 4, 2023, but the servicer did not inform me of it and continued to provide monthly statements that did not reflect the payment. Foreclosure proceedings began in December 2023, and the property was sold on February 18, 2024. My mortgage stated that insurance proceeds should be used to rebuild the home or apply to my debt prior to foreclosure. The servicer not only foreclosed for the full amount of my debt but also kept the foreclosure proceeds and attempted to apply the insurance money after the foreclosure. Is it legal for the servicer to do this?
A: Something does not sound correct. If the mortgage was paid off from the insurance company, the servicer should not continue with the foreclosure. It would need to be canceled. An experienced real estate attorney should review the documents and former loan payoff to be certain. Good luck.
Kenneth V Zichi agrees with this answer
A:
You need to consult with that licensed local real estate lawyer ASAP.
I concur something 'doesn't sound right' starting with the fact it took you over a year to ask this question. It may be too late now, but if the mortgage was truly 'paid off' there would have been no foreclosure. Something more is going on here.
Seek that local opinion from someone who can look at all the documents.
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