Dealing with a home foreclosure can be extremely stressful and upsetting.
If you live in the state of Michigan, there are certain procedures that must take place in order for a foreclosure to go through.
This helpful guide discusses the Michigan Foreclosure process, so read on to learn more about how it works and what you can expect.
Michigan Mortgages and Missed Payments
In the state of Michigan, when you purchase a property, you’ll sign a promissory note and a mortgage. The note is a promise that you plan to repay the home loan per the terms of your mortgage.
The mortgage is the security of the loan, but sometimes, you might miss a payment. If you happen to miss a payment, many loans offer a short grace period of around ten to fifteen days.
After this grace period, your mortgage company may issue a late fee. Read all of your loan documents carefully to find out what your grace period and the late fee is.
Late fees may vary depending on state and federal law so if you’re in doubt, call your mortgage servicer for more details. If you miss more than one payment, your mortgage company will likely start sending you payment reminder letters.
Over time, you’ll likely begin receiving collection phone calls on top of the letters to remind you to make your payments. If you’re having trouble, now is a good time to discuss some options so you can get caught up without going into foreclosure.
Michigan Foreclosure Breach Letters
In Michigan, most mortgages include a clause that requires your lender to send you a notice if there is an issue with payments. This letter is typically called a breach letter or a demand letter.
The purpose of the letter is to notify you that you are in default. It must specify the exact default, what you can do to fix the default, a date, and that if you fail to correct the default it may result in the sale of your property.
This breach letter may also include a demand from your bank to pay the loan in full in order to correct the default. A law was passed in January of 2014 that requires lenders to wait until you are more than 120 days delinquent.
The purpose of this letter and notification is to give you ample time to catch up on your payments. You may also explore other loss mitigation opportunities if they are available to prevent foreclosure.
Foreclosures
Once a foreclosure is in effect, they are usually performed directly by the lender without having to go to court. The mortgager must have a power of sale clause in order to go this route.
In the state of Michigan, the notice of sale of your property must be posted and published to the public. Your lender’s attorney will publish the notice of the sale once per week for a total of four consecutive weeks.
Typically, this notice of sale is published in the local newspaper where your home is located. After 15 days have passed from the first publication notice, a copy must be posted on your property.
This copy or sign has to be located in an obvious, conspicuous place. In some cases, your mortgage company may offer you the right to correct the default and reinstate the loan.
This happens at any time prior to five days before the actual foreclosure sale begins. This is not a statutory right in Michigan, but check with your mortgage provider to see if you qualify so you can save your home.
If your home does go into foreclosure sale, it typically occurs at the courthouse in your local county or city where the home is located. The property is sold to the highest bidder or it may revert to your lender.
Redemption Periods: What You Need to Know
The term redemption period means that you have a legal right to pay off the total amount of debt including the principal balance and additional costs or interest. This process will allow you to reclaim your property after the foreclosure sale.
In most areas of Michigan, the redemption period is six months. This only applies if your property does not exceed four units and if more than two-thirds of the original balance is still owed to the lender.
If the amount you owe is less, your redemption period is one year. There are many different requirements and time periods that pertain to a redemption period, so check with your local jurisdiction to be sure.
A foreclosed homeowner in Michigan has the right to live in their home throughout the redemption period. On the other hand, the purchaser who bought the property at the foreclosure sale also has the right to inspect the home at the same time.
The inspection allows the purchaser to check the interior and exterior of the home for any issues. If extreme damage is found, or if an inspection is refused, the purchaser can start eviction proceedings toward the homeowner and take the property from them.
Eviction After a Foreclosure
Once your redemption period expires, you must vacate the property. If you do not vacate, the new owner could offer you a cash deal in exchange for you to agree to move out.
If that doesn’t work, you may have to go to court after the official eviction order is issued. It’s important to understand all of the laws associated with Michigan Foreclosures.
Talk to a local foreclosure attorney as soon as possible if you’re ever in doubt or have any questions about the process. They can help walk you through the entire thing and give you the advice you need so you can either save your home or recover from foreclosure.
You Have Options
Remember that the Michigan Foreclosure process has several steps that must take place before you have to vacate your home. Consult with an attorney to find out what your rights and responsibilities are.
For more information about cash offers on your home, short sales and more visit our website and contact us today.