Ever wonder how the foreclosure process works or wonder how long you have before you get kicked out of your home. Here is how it works.
Michigan foreclosure process
When you are 3 payments behind on your mortgage the bank gives you notice of foreclosure. Usually you have to pay up all three past payments or the bank starts the foreclosure process. What happens is that the bank then hires a foreclosure attorney. The foreclosure attorney prepares the documents and then the home is sent to sheriff sale.
A Michigan Sheriff sale takes place at the County (Wayne County, Oakland County) where the home is located at. What happens is the County auctions the property off to pay off the bank mortgage. Sure anybody can bid on it and buy it. Sure you can bid any price you want on it. But the bank is owed a certain amount because of the mortgage. So what they do is bid it up to the point of what they are owed. That way they get full rights to the property without any other person or company having any rights to it.
For example. Let’s say you have a first mortgage of $185,000 on the house and a second mortgage of $17,000. The first mortgage bank want it’s money back. So even if there is another bidder on the house the first mortgage bank will bid up to $185,000. That way the second mortgage lender now has no right to the property. If a contractor has a lien on the property he loses the right to collect the money. The only way the second mortgage holder or the contractor has the right to the property is if they out bid the bank.
But in todays market the problem most likely is that the home is not worth what is owed on the mortgage. So nobody is going to try to out bid the bank. Why pay more than the property is worth. The contractor or the second mortgage company would not be able to sell the property for enough money to clear what they are owed. So the bank with the first mortgage usually ends up with the property 100% of the time.
So usually the Michigan sheriff sale is just a formality of the the first mortgage holder getting the property.
Michigan foreclosure timeline
|3 missed payments||3 months||bank starts foreclosure process and hires foreclosure attorney|
|Michigan Sheriff sale date||anywhere from 1 week after the bank starts the foreclosure process up to 3 months||posted on the door of the property and published in the newspaper|
|Michigan redemption period||6 months. Over 3 acres there is a 12 month redemption period||the time the property owner has to come up with the money and pay off the home in full to the sheriff sale buyer. Title is transferred to sheriff sale buyer but homeowner has the right to pay off the sale price and regain ownership of the property.|
|The End of the redemption period||Home owner has to move out or is evicted. Property legally becomes property of sheriff sale buyer.|
Michigan Redemption Period
Michigan redemption period is six months for residential homes not over 4 units or 3 acres. All other properties have a 1 year redemption period. If the Michigan property is determined to be abandoned (based on either a personal inspection conducted by the lender, or a statutory mailed notice asserting abandonment which has not been responded to by borrower) the redemption period can be shortened to thirty (30) days.
During this whole period from 1st missed mortgage payment to 6 months of redemption period after the sheriff sale the homeowner can live in the house. They can live in the house for free without making a payment. So a person that loses their house in a Metro Detroit foreclosure could live in the house without paying a dime. The time period could be at least 9 months up to over a year and a half. I have even heard of even longer. It just depends on how long the bank takes to get the foreclosure process started and scheduling the sheriff sale.
I hope this help you understand Michigan foreclosure process a little better. If you are losing your home to foreclosure and want to explore your options give me a call on my cell (248) 310-6239. We might be able to sell your home in a short sale.
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