Understanding the Foreclosure Process in Michigan
By Michael Delaware, REALTORŪ
Foreclosure is legally defined as ‘The procedure by which mortgaged property is acquired and sold on default of the mortgagor in satisfaction of a mortgage debt.’ It can more easily be understood by describing it as: ‘The legal process which a mortgage holder follows to seize a property from a borrower, evict the occupant(s) and sell the property to settle a bad debt.’
The Foreclosure process varies from State to State. There are two foreclosure processes used in Michigan:
Foreclosure by Court Action: A mortgage may be foreclosed by filing a lawsuit in the Michigan circuit court. The court may order the property sold six months after the initial filing of the lawsuit.
Foreclosure by Advertisement: If the mortgage contains a power of sale clause and there has been a breach of the terms of the mortgage, such as nonpayment of the loan, then the property may be foreclosed on through a non-judicial ‘foreclosure by advertisement’, unless the mortgage is held by the Michigan State Housing Development Authority (MSHDA). The notice of a foreclosure sale must be published once a week for four weeks in a newspaper of general circulation in the county where the land is situated. Within 15 days after the first publication, a true copy of the foreclosure notice must be posted in a conspicuous place on the premises described in the foreclosure notice. The lender or the lender's agents have a right to enter the mortgaged premises to post or deliver foreclosure notices.
In Michigan, there is a general timeline or sequence which foreclosed homes or properties follow:
A) Someone misses a payment on their mortgage. The account goes 30 days past due.
B) The account is sent to collections, and the borrower begins to receive phone calls and letters from the collection department.
C) The account falls 90 days past due, the mortgage holder will issue a foreclosure decree (a notice to the borrower that they intend to foreclose on the property) and send the file to an attorney.
D) Next follows a 5 to 6 week process which the attorney sends notices to the borrower as well as posts notices in the newspaper advertising an intended sale date of the property.
E) The sale of the property, often referred to as a ‘Foreclosure Sale’ or ‘Sheriff’s Sale’ as it occurs through the Sheriff’s department. The property is sold to the highest bidder, usually with a predetermined minimum sale price established by the mortgage holder. Often the mortgage holder will buy back the house at the sale themselves if no one bids the minimum.
F) From the date of the Sheriff sale, the redemption period begins. The ‘redemption period’ in Michigan is a period allowed by law for the borrower to buy back the house, at the full price of what it sold for at sale plus fees. This period is six months from the date of sale, or 12 months if the property is over 3 acres. The redemption period can be shortened to 30 days if the property is abandoned.
G) After the redemption period expires, the occupant(s) if any are evicted, and clear title to the property passes to the lender.
H) The property is then sold through the REO (stands for ‘Real Estate Owned’) Department of the lender to recover their losses.
An Equal Opportunity Company. Equal Housing Opportunity. Licensed in the State of Michigan.
All rights reserved.
© 2012 Myers Internet All Rights Reserved
Powered by: Myers Internet | Admin Login