Property Foreclosure Laws in Michigan
The state of Michigan's foreclosure laws are based on title theory. This states the lending agent is considered to be the owner of the property until the borrower fulfills the mortgage contract. In Michigan, the foreclosure process typically takes approximately 60 days to complete unless the borrower chooses to fight foreclosure.
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Judicial Foreclosure
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Michigan allows two options for lenders to foreclose on property. Under the judicial method, the lender must file a lawsuit against the borrower for missed payments. Once the suit is filed, the court typically sets a deadline for the borrower to make the necessary payments. If payment is not received by the deadline, the court orders foreclosure proceedings to begin.
Nonjudicial Foreclosure
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A nonjudicial foreclosure gives the lender the ability to foreclose without the need for a court order. The lender can insert a power of sale clause into the contract, allowing the lending agent to foreclose when payments are not made according to the details of the contract. The lending agent typically designates a representative, called a trustee, to handle this process.
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Power of Sale
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The power of sale clause usually spells out the details of the foreclosure sale process. In the event that it does not, the state of Michigan enforces certain minimum requirements. A notice of sale must appear in a local newspaper at least once per week for four weeks, in addition to a notice being posted on the foreclosed property at least 15 days after the first notice appears in the newspaper. The sale must be held during the hours of 9:00 a.m and 4:00 p.m. on the date listed on the notice of sale.
Deficiency and Right of Redemption
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A deficiency occurs when the auction price is less than the balance due on the mortgage loan. When this happens in Michigan, the lender has the right to pursue a deficiency judgment against the former borrower for the difference. A right of redemption allows the borrower to reclaim the property after the auction is completed by paying the full balance due on the loan plus all foreclosure costs. The amount of time the borrower has to make this payment varies based on the terms of the contract.
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