Michigan Mortgage Foreclosure Law
There are two ways lenders in Michigan can foreclose: 1) Judicial Foreclosure where the lender must take the borrower to court, and 2) Foreclosure by Advertisement where the lender may foreclose by scheduling a Sheriff’s sale and advertising that sale in a local paper. Michigan is considered a Foreclosure by Advertisement state because nearly all Michigan foreclosures are by advertisement. However, both types of foreclosure are permitted. FAQ: Judicial Foreclosure FAQ: Foreclosure by Advertisement
Foreclosure Timeline and Process
The Michigan State Housing Development Authority offers an in-depth explanation of the foreclosure timeline and process in the state of Michigan here (pdf). Additionally, Legal Aid of Western Michigan has created a document outlining the events a lender must take once a mortgage falls behind according to the Consumer Financial Protection Bureau (CFPB) regulations.
Six-Month Post-Foreclosure Redemption Period
For 50 years, Michigan Foreclosure Law has included a six-month redemption period (12 months for agricultural property that is larger than three acres) for homeowners whose homes have sold at the Sheriff’s Sale. This period is meant to provide a reasonable amount of time for homeowners to redeem the home, refinance it, sell it on a short sale or find a new place to live. If a homeowner abandons the property before the six months is up, the lender can shorten the redemption period to 30 days. In June 2014 changes to the redemption period in Michigan went into effect. The purchaser of a home at sheriff sale has the right to inspect the interior and exterior of the house and all other buildings on the property. Exterior inspections can be done as often as the purchaser wants, without any notice. An interior inspection requires that a letter be sent identifying the purchaser, providing contact information along with other information including their right to inspect. A second letter is then required 72 hours before the interior inspection setting a date and time. “Unreasonable” refusal of any inspection could lead to eviction proceedings begin started. For more information here is an FAQ about Michigan Redemption periods (pdf).
Protecting Tenants in Foreclosure Act
Tenants living in foreclosed properties are directly affected by the impact of foreclosure. The Protecting Tenants in Foreclosure Act is a federal law that makes clear what happens when the foreclosed landlord’s redemption period is over and the bank or mortgage company takes over as owner of the house or apartment building. The law provides for tenants with an existing lease as follows:
- both parties (bank and tenant) must honor and continue with the terms of the current lease
- all tenants are guaranteed at least 90 days notice before the can be evicted, unless the bank or mortgage company intend to use the property
- tenants must pay the bank their monthly rent and the bank must provide all maintenance and repairs to the house or apartment.