The Foreclosure Process In Michigan

A Sign of the Times: ForeclosureThe foreclosure process in Michigan can take anywhere from nine months to a year if it moves quickly. We have some clients where the foreclosure process takes years because, for reasons known only to the lender, the lender just doesn’t do anything to recover the house. Clients for a variety of personal reasons regularly decide to let their house go.

Before clients make this decision they always ask the exact same question: When do I have to move after foreclosure? Without going into variables, e.g. unlikely loan modifications or disinterested lenders, the timeline laid out in this post assumes the lender is fairly aggressive in recovering the property by advertisement after default by nonpayment. It’s best to prepare for the worst case scenario but hope for the best.

Foreclosure Timeline:

Days 1 through 15: Nonpayment of mortgage note.

Days 16 through 30: The note is usually late after the 15 day grace period and a late fee is charged. Collection calls or letters from the lender usually begins.

Days 31 through 45: The lender continues collection attempts. The lender may note negative remarks on the borrower’s credit report.

Days 45 through 60:  The lender may consider the continuing failure to pay as a breach.

Days 61 through 90: The note is accelerated and the lender will not accept partial payments. Any partial payment made will be returned. Nothing less than the unpaid amount plus late fees and interest are due. Total acceleration will result in the total balance of the note due.

Days 91 through 150: The lender or its servicer refers the nonpayment to a local attorney to begin formal foreclosure proceedings, usually by advertisement but sometimes by judicial foreclosure. At this point, the attorney fees are added to the unpaid balance and will also need to be paid to stop the foreclosure. The foreclosure is advertised for four consecutive weeks in the legal newspaper. You are entitled to notice of the foreclosure which usually comes by mail and by a posting tactfully duct taped to your front door. Note: Prior to the foreclosure process, the lender must offer the borrower a 90 day pre-foreclosure workout period. The borrower has 14 days to accept the workout period (why wouldn’t you), if not, then foreclosure begins.

Days 150 plus 6 months: Once the foreclosure notice period is over, the property is sold at a sheriff sale. A public auction is held by the local sheriff and the property is sold to the highest bidder, which is usually the lender. The sheriff will issue a “sheriff’s deed” to the buyer. The borrower typically has six months to redeem the property. The borrower remains the owner and can sell, refinance, or just live out the redemption period without making any more house payments.

In short, the foreclosure period takes anywhere from three to six months. After foreclosure, you have six months to either redeem the house or just live there. If you aren’t out after the redemption period, the buyer at the sheriff sale must evict you to recover the house. The lender can’t use self help and just throw out the borrower.

The bottom line is you have six months to live in the house after the sheriff sale. Until that sale happens, you aren’t even on the clock.

Creative Commons License photo credit: Tobyotter