A Michigan foreclosure is almost always handled out of court. This is called a non-judicial foreclosure. The foreclosure process can take from 3 to 14 months depending on the length of the redemption period. The average foreclosure takes around eight months.
In court foreclosures, called Judicial foreclosures, are permitted in Michigan; however, most mortgages contain a clause enabling a lender to sell a property out of court once a borrower defaults on the loan. While Michigan foreclosure law does not require that a lender send out a Notice of Default (NOD), to the borrower before scheduling a foreclosure sale, the mortgage itself may require such notification. A borrower’s right to stop the foreclosure by paying off the default is also dictated by the mortgage.
In a Michigan foreclosure, the borrower generally has the right to:
- a pre-foreclosure breach letter
- apply for loss mitigation.
- get current on the loan and stop the foreclosure sale.
- receive special protections if they are in the military.
- pay off the loan to prevent a sale.
- redeem the property after the sale.
- file for bankruptcy.
- get any excess money after a foreclosure sale.
Notice of Sale & Auction
The foreclosure sale generally occurs about two months after the lender starts the foreclosure process. A Notice of Sale (NOS) is published once per week for four weeks in a local newspaper leading up to the sale. The sale must be at least 28 days from the first publication date. The notice is also required to be posted on the property during the publication period. The Notice of Sale must contain the lender name, borrower names, mortgage information, the default amount, a legal description of the property, and the length of the redemption period.
A trustee appointed by the court or the county sheriff will conduct the public auction between 9:00 a.m. and 4:00 p.m. on any business day, usually at the county courthouse. Anyone may bid. The property is sold to the winning bidder.
The sale may be postponed by posting a Notice of Adjournment at the time and location of the sale.
The official conducting the sale completes the documents necessary for transfer of ownership to the winning bidder at the sale. These documents must state the redemption period expiration date. The redemption period will vary, but typically runs six months from the foreclosure sale date. During this time, the borrower can redeem the property by paying the winning bid amount plus all applicable costs.