Michigan Foreclosure Laws

Foreclosure laws in Michigan can either be judicial or not-judicial which is determined by the presence of Power of Sale clause in the mortgage agreement signed between the lender and the borrower. Mortgage is the primary Security of Instrument. Typical non-judicial foreclosure timeline is 2 months.

Judicial And Non-Judicial Foreclosures in Michigan

Most of the foreclosures in Michigan are non-judicial foreclosure, which is also known as foreclosure by advertisement. If the mortgage agreement contains a Power of Sale clause, which is signed by the borrower, the lender is authorized to pursue a foreclosure on the property without a court hearing. This happens in the event that the borrower is found to have defaults on payments. Under the state’s foreclosure laws, the lender is not required to inform the borrower before setting up a date of foreclosure sale unless stated in individual mortgage agreement. Typically, the sale is scheduled for about 2 months after the borrower is found to be in default. In order to stop the foreclosure, the homeowner or borrower should settle the default amount owed before the foreclosure sale takes place.

Under the Michigan foreclosure laws, statutory right of redemption is applicable. This redemption right allows a borrower, whose property has been foreclosed, to regain ownership of the property by making full payment of the unpaid mortgage loan and any applicable costs. Usually, redemption period is 6 months from the date of the foreclosure. Transfer of property ownership to the winning bidder takes effect once the redemption period expires.

Deficiency judgment can be obtained if granted by judge. At the foreclosure sale, when a property is sold for less than the amount of mortgage loan, the lender can claim for deficiency judgment. This means that the borrower owes the difference between the amount of the property sold and the amount of the original loan to the lender.

Foreclosure sale, which is similar to that of a public auction, is conducted at the county courthouse and usually presided by a trustee or Sheriff. The winding bidder is presented with documents of property ownership.

Notice Of Sale

A Notice of Sale is important and should be published in a local weekly newspaper for 4 weeks before the public auction. Also, the Notice should be posted on the property in foreclosure. A sale may be postponed. However, if the sale is postponed for more than a week, a Notice should be re-served in the same manner as the original Notice.