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I am sorry to hear that the lender might have taken advantage of your parents, although it would not surprise me at all if that is what the bank did.
Banks, lenders and other financial institutions do not like to go through foreclosure because it costs them time, they incur legal fees and in the end, they end up with title to the property on which they foreclosed. They are in the money and lending business and holding title to property ties up their money and it means they have that much less to lend to borrowers on which they can charge interest. Moreover, while they are holding the property and until they can sell it, they incur costs in maintaining the property and paying the taxes on the property. So, lenders are reluctant to even accept a Deed in Lieu of Foreclosure until the borrowers have had the property on the market for at minimum of at least 3 months.
If your parents' lender accepted a Deed in Lieu of Foreclosure, part of the transaction would be to make sure that the lender executed a Release of all liability in favor of your parents so that if the lender sold the house for less than the balance on their loans, they would not come after your parents for any deficiency, i.e., any difference between the sale proceeds and the balance due on the loans.
Your parents should not be made to put their mobile home on the market and wait for three or more months before the lender decies if it will accept a Deed in Lieu of Foeclosure. The best thing for your mother and stepfather to do as soon as possible is to get a lawyer to represent them in their negotiations with the bank. The lawyer should be experienced in real estate law and litigation and he/she should make it very clear to the lender that they have taken advantage of the elderly, they made loans to them without conducting their due diligence and now they expect your parents to pay for their ineptitude. When the lawyer makes it clear that he/she will not be intimidated by the lender, is not afraid of the lender, and that he/she is fully prepared to pursue a course of action against the lender, file a lawsuit against them and claim damages for, among other things, that the lender took advantage of an elderly couple, unless they immediately accept a Deed in Lieu of Foreclosure, I am positive that the lender will be singing a different tune and doing a different dance because they are not used to anybody standing up to them and giving them a taste of their own medicine, nor does the lender want to try and explain to a Judge why and how they took advantage of an elderly couple.
If you give me a moment, I will see what is available in the way of free or low cost legal representation for the elderly in Michigan.
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