Foreclosure & Alternatives Law
Foreclosure Law in Michigan
When a person purchases a home in Michigan using a mortgage, that homeowner has to ensure that all payments are made on time. When payments are missed, the lender might decide to foreclose on the property. In Michigan, foreclosures are almost always handled through the non-judicial method. That means the foreclosure is handled under a power of sale clause in the mortgage contract.
Borrower Notification and Response
Michigan law doesn't require a lender to notify a borrower via a mailed document that foreclosure is occurring. Instead, the lender only has to publish a notice in the newspaper and post a notice on property. The newspaper notice must be published four weeks in a row prior to the sale. It must appear in the newspaper one time per week. Within 15 days of the first newspaper publication, the lender must post a notice on the property.
Military Service Member Protection
Military service members have special protections against foreclosures in Michigan. Unless a court orders a sale or foreclosure on a service member's home, the lender is unable to foreclose using the non-judicial process during the period of military service. That right also extends for six months after the service term is over. Members of the military who have past due mortgages should seek the assistance of a foreclosure attorney to learn more about this protection.
Reinstatement, Redemption, and Deficiency
Michigan doesn't require that a lender reinstate a mortgage unless the mortgage contract specifically contains a reinstatement clause. That means that it is at the lender's sole discretion if the borrower is allowed to pay past due payments and fees to stop the foreclosure process. For this reason, it is vital that Michigan homeowners take action as soon as they know the home is up for foreclosure.
The redemption period in Michigan depends on the status of occupancy in the home and the balance due on the mortgage. A residence that is abandoned has a 30-day redemption term. A residence that is occupied with less than 2/3 of the balance remaining on the mortgage has a one-year redemption term. A residence that is occupied with more than 2/3 of the balance remaining on the mortgage has a redemption term of six months. During the redemption period, the borrower can reclaim the property if able to pay the mortgage company the entire balance due on the loan. Some homeowners might do this by securing another loan, but that can prove to be a challenge.
Lenders can seek a deficiency judgment against a borrower. If the lender buys the home at the sale, it is possible for the borrower to contest the deficiency. This usually occurs if the mortgage holder's purchase price was significantly lower than the property's fair market value.
Going through foreclosure is a stressful experience. Homeowners in this boat should learn about their options for stopping a foreclosure. Short sales, mortgage modifications, and other possibilities might be viable options. An experienced foreclosure attorney can help homeowners learn about their options.