Understanding the Foreclosure Process in Michigan

Foreclosure Process in Metro Detroit - Sell Your House Fast

Understanding the foreclosure process in Michigan is an important part of navigating your own home foreclosure.

Before we dive in…

Understanding the Foreclosure Process in Michigan

What is foreclosure anyway?

Foreclosure is the legal process that lenders use to take back property securing a loan, typically after the borrower stops making payments.

Foreclosure is no fun.  But just know that it’s not the end of the world.

When you know how foreclosure in Michigan works… it provides you with the knowledge to make sure you navigate it well and come out the other end as well as possible.

The Basic Stages of A Foreclosure

There are a few phases that are important to any foreclosure process.

Foreclosure works differently in different states around the country. Michigan is redemption state but more on this and what that means for you, we’ll dive in later…

The two ways different states use to foreclose upon a property are: judicial sale or power of sale.

Connect with us by calling (248) 590-3040 or through our contact page to have us walk you through the specific foreclosure process here locally in Metro Detroit.

In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment including fees and penalties to bring the loan current. Each bank has a loss prevention department which works directly with the board of trustees to make decision on each asset based on the value of the asset and market conditions. With market crash in 2008, foreclosure time were almost doubled in most states, as bank did not want houses to be abandoned.

Under Judicial Foreclosure:

  • Your mortgage lender must file suit in the court system.
  • You’ll get a letter from the court demanding payment.
  • Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
  • If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction at the county level.
  • Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.

Under Power of Sale (or Non-Judicial Foreclosure):

  • The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
  • After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
  • The trustee can then sell your property to the lender at a public auction (notice must be given).

Anyone who has an interest in the property must be notified during either type of foreclosure.

For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.

What Happens After A Foreclosure Auction?

After a foreclosure is complete, the loan amount is paid off with the sale proceeds.

Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.

A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale. It’s important to address this matter with your legal counsel.

Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.

Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.

Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Fast Home Offer Guys to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.

In Michigan there is a 6 month redemption period.  The redemption Period starts day of Sheriff Sale. If the amount claimed to be due on the mortgage at the date of foreclosure is less than 2/3 of the original indebtedness, the redemption period is 12 months. Farming property can be up to twelve (12) months.

The homeowner can live in the property, is not required to make payments, can sell or buy back property and should maintain the property, utilities and insurance. The homeowner must allow the purchaser to inspect the home and all structures during the redemption period.

To redeem the property the borrower must pay the amount bid at the sheriff sale plus interest and fees. Understanding the foreclosure process in Michigan is crucial to saving the property.

Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.

If you need to sell a property near Metro Detroit, we can help you.

We buy houses in Metro Detroit Michigan like yours from people who need to sell fast, and we buy them in any and all conditions. Our direct house buying process is transparent and efficient. Fast closing is available in as little as 7 days.

When dealing with any house buying companies in the Metro Detroit area, you want to make sure you are dealing with a company that has a proven record. Fast Home Offer Guys is a local trusted real estate company that buy houses for cash fast.

Give us a call anytime (248) 590-3040 or
fill out the form on this website today! >>

 

Another Foreclosure Resource For Metro Detroit Michigan HomeOwners:

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