Most Michigan home foreclosures happen out of court, by advertisement. The lender publishes a notice for four weeks, posts it on the house, and sells the property at a sheriff’s sale. You then have a redemption period, usually six months for a home, to pay off the sale amount or otherwise resolve the debt. Federal servicing rules can delay a foreclosure while a complete loan modification application is under review. Acting before the sale gives you the most options.
Foreclosure by advertisement
Michigan allows a lender to foreclose without a lawsuit if the mortgage contains a power of sale, which most residential mortgages do. Under MCL 600.3204, the foreclosing party may proceed only if:
- There is a default that makes the power of sale operative.
- No lawsuit to recover the mortgage debt is pending, or one has ended without the debt being collected.
- The mortgage has been properly recorded.
- The foreclosing party owns the debt, holds an interest in it, or is the servicing agent of the mortgage.
If the foreclosing party is not the original lender, a record chain of title showing the assignment to it must exist before the date of sale (MCL 600.3204(3)). Missing or late-recorded assignments are worth checking.
Notice of the sale
The notice of sale must be published once a week for four successive weeks in a newspaper in the county where the property is located. Within 15 days after the first publication, a copy must be posted in a conspicuous place on the property (MCL 600.3208).
The sheriff’s sale
The sale is a public auction to the highest bidder, held at the place where the county’s circuit court sits, between 9 a.m. and 4 p.m. It is conducted by the person named in the mortgage for that purpose or by the sheriff or a deputy (MCL 600.3216). The lender often buys the property with a credit bid.
Redemption periods
After the sale, you have a period to redeem the property. The length depends on the property and on how much was owed (MCL 600.3240):
| Situation | Redemption period |
|---|---|
| Residential, 1 to 4 units, more than 66⅔% of the original loan owed at the date of the foreclosure notice | 6 months from the sale |
| Residential, 1 to 4 units, 66⅔% or less owed | 1 year from the sale |
| Residential, 1 to 4 units, found abandoned under MCL 600.3241 | 1 month |
| Abandoned under MCL 600.3241a | 30 days, or until the notice period in that section ends, whichever is later |
| Commercial, industrial, or residential over 4 units | 6 months |
| Agricultural property | 1 year |
Most homeowners still owe more than two-thirds of the original loan, so six months is the usual period. The abandonment rules can shorten it to a month.
During the redemption period, you are liable to the buyer for damage beyond normal wear and tear. If the buyer has given you notice and you plan to move out, you must tell the buyer at least 10 days before you leave (MCL 600.3278).
Loan modification and foreclosure defense
Michigan’s former state loan modification process, in MCL 600.3205a to 600.3205d, was repealed effective June 30, 2013. The main protections for borrowers with mortgage servicers now come from federal rules under the Real Estate Settlement Procedures Act (Regulation X, 12 CFR 1024.41):
- 120 days. A servicer generally may not make the first notice or filing for foreclosure until the loan is more than 120 days delinquent.
- Acknowledging your application. If the servicer receives a loss mitigation application 45 or more days before a foreclosure sale, it must tell you in writing within 5 business days whether the application is complete and, if not, what is missing.
- No sale while a complete application is pending. If a complete application is received more than 37 days before a sale, the servicer generally may not move for judgment or conduct the sale until it has decided the application and any appeal, you have rejected the options offered, or you have failed to perform under an agreement.
Foreclosure defense starts with the paper trail. Errors in standing, notice, or the servicer’s handling of a modification request can be grounds to challenge or delay a foreclosure, or to negotiate a resolution. Courts are generally reluctant to undo a completed sale, so problems are best raised before it happens.
Residential purchase disputes
Disputes also arise when buying or selling a home: a seller who backs out, a deposit that is not returned, or defects that show up after closing. Most of these turn on the written purchase agreement, its contingencies and deadlines, and what was disclosed.
Michigan’s Seller Disclosure Act applies to most transfers of property with one to four residential units, including sales, land contracts and leases with an option to buy (MCL 565.952). The seller must deliver a written disclosure statement before signing a binding purchase agreement. If the disclosure, or an amendment, is delivered after the agreement is signed, the buyer may terminate by written notice within 72 hours if it was delivered in person, or within 120 hours if it was sent by registered mail. That right ends at closing (MCL 565.954).
What to gather
- Your mortgage, note and any recorded assignments.
- Every letter from your servicer, including the foreclosure notice and any modification decisions.
- Proof of what you sent to the servicer, and when.
- For a purchase dispute: the purchase agreement, the seller’s disclosure statement, inspection reports and all messages with the agents.
Act when the notice is published. The notice of sale runs for four weeks before the sheriff’s sale. A complete loss mitigation application must reach the servicer more than 37 days before the sale to stop it under federal rules.
Learn more about the firm, or contact us to talk through your situation.
Sources: MCL 600.3204; MCL 600.3205a to 600.3205d (repealed, 2012 PA 521); MCL 600.3208; MCL 600.3216; MCL 600.3240; MCL 600.3241 and 600.3241a; MCL 600.3278; MCL 565.952 and 565.954; 12 CFR 1024.41.
Questions people ask us
How long is the redemption period after a Michigan foreclosure sale?
For a home of one to four units, it is usually six months from the sheriff’s sale if more than two-thirds of the original loan was still owed when the foreclosure notice was published, and one year if less was owed. It can be much shorter if the property is found to be abandoned.
Can my lender foreclose while I am applying for a loan modification?
Federal mortgage servicing rules generally bar a servicer from starting foreclosure until the loan is more than 120 days delinquent. If a complete loss mitigation application arrives more than 37 days before a scheduled sale, the servicer generally cannot hold the sale until the application is decided.
Can I stay in my house during the redemption period?
In general, yes. You are responsible for damage to the property beyond normal wear and tear during that time, and if you plan to move out after the buyer has given notice, the statute requires you to tell the buyer at least 10 days before you leave.
What if the seller hid a problem with the house I bought?
Michigan’s Seller Disclosure Act requires most sellers of one- to four-unit homes to give a written disclosure statement before a binding purchase agreement is signed. Whether you have a claim depends on what was disclosed, what the seller knew and what your purchase agreement says.