Despite the substantive decline in mortgage foreclosures since the height of the Great Recession, in June 2016 there were nearly 100,000 homes across the country in some stage of the foreclosure process, according to RealtyTrac. The crisis may have subsided, but historical trends continue to show an average of 80,000-120,000 homes in some stage of foreclosure annually.
In Michigan, there are two ways lenders can foreclose:
1) Judicial Foreclosure: Where the lender must take the borrower to court, and;
2) Foreclosure by Advertisement: Where the lender may foreclose by scheduling a Sheriff’s sale and advertising that sale in a local paper.
Michigan is considered a “Foreclosure by Advertisement” state because nearly all Michigan foreclosures are by advertisement. However, both types of foreclosure are permitted. The Michigan State Housing Development Authority offers an in-depth explanation of the foreclosure timeline and process; click here for more information.
For 50 years, Michigan foreclosure law has included a six-month redemption period for homeowners whose homes have sold at the Sheriff’s Sale. This period is designed to provide a reasonable amount of time for homeowners to redeem the home, refinance it, sell it on a short sale or find a new place to live. If a homeowner abandons the property before the six months is up, the lender can shorten the redemption period to 30 days.
Beginning in June 2014, changes to the redemption period in Michigan went into effect, including that the purchaser of a home at Sheriff Sale has the right to inspect the interior and exterior of the house and all other buildings on the property. Exterior inspections can be done as often as the purchaser wants, without any notice. An interior inspection requires a letter be sent identifying the purchaser, providing contact information, along with other information including their right to inspect. A second letter is required 72 hours before the interior inspection, setting a date and time. “Unreasonable” refusal of any inspection may lead to eviction proceedings.
Tenants living in foreclosed properties are particularly affected by the impact of foreclosure. The Protecting Tenants in Foreclosure Act is a federal law that makes clear what happens when the foreclosed landlord’s redemption period is over and the bank or mortgage company takes over as owner of the house or apartment building. The law provides for tenants with an existing lease as follows: both parties (bank and tenant) must honor and continue with the terms of the current lease; all tenants are guaranteed at least 90 days notice before they can be evicted, unless the bank or mortgage company intend to use the property; and tenants must pay the bank their monthly rent and the bank must provide all maintenance and repairs to the house or apartment.
If you are a homeowner facing foreclosure, or a tenant whose landlord failed to make their mortgage payments, the attorneys at Resnick Law can help. Contact us online or call (248) 642-5400 to schedule a free consultation.