Laws on Foreclosures in Michigan
Michigan has suffered a great deal due since the economic downturn starting in 2008. In fact, Michigan has one of of the highest unemployment as well as foreclosure rates in the nation. Understanding Michigan's foreclosure laws can help you avoid foreclosure and bankruptcy.
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Pre-foreclosure
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For a foreclosure to take place in Michigan, your mortgage must contain a clause that allows your lender to sell your house out of court as soon as you default on the loan. Under Michigan law, a lender doesn't need to send you a default notice prior to scheduling a foreclosure sale on your home. You may have a right to halt the foreclosure by paying off the default. This is normally stipulated in your mortgage terms, so be sure to check with your lender for the details.
Non-judicial Foreclosure
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The most common foreclosure in Michigan is called a non-judicial foreclosure. In this type of foreclosure, there is no court action. However, by law, a non-judicial foreclosure requires a notice referred to as a "foreclosure by advertisement."Your mortgage documents contain a provision called a Power of Sale clause. One you default on your loan (which means you miss a specified number of payments or fall behind on your payments by a certain amount), an attorney who represents your lender can legally foreclose on your property. In many cases, the attorney helps organize the sale of your home in the form of an auction. These non-judicial foreclosure are subject to stringent rules and regulations and require comprehensive legal documentation.
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Power of Sale Laws
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For the aforementioned Power of Sale clause to take effect, the following steps are required. Before initiating a foreclosure, your lender needs to communicate a Notice of Sale date for a period of one month in a local newspaper. A second notice must be posted at your property within 15 days of the original notice. The Notice of Sale must contain specific information, including your name, the lender's name, the date of the mortgage, the amount you owe, a description of your property and the date of foreclosure sale. The foreclosure sale must happen between 9 a.m. and 4 p.m., and it needs to be a public auction. The highest bidder wins the auction.
Judicial Foreclosure
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A judicial foreclosure is much less common in general than a non-judicial foreclosure. For a judicial foreclosure to take place, the court will decree the amount you owe and give you a specific time to pay this amount. If you don't pay within the specified time frame, the court issues a notice of sale for the foreclosure process to begin.
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References
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