Michigan foreclosures take one of two paths to completition. The least common path is called a judicial foreclosure. In a judicial foreclosure, the mortgage holder files a complaint in circuit court requesting that the court order the property sold. The court rules do not allow this sale to take place until 6 months after the complaint is filed. A complaint for foreclosure is often combined with counts for other relief, such as money damages from any amount still due after the sale. That amount is referred to as a deficiency. A copy of the complaint and a summons is personally served on the homeowner.
If the homeowner does not answer the complaint, or if no legitimate defenses are raised to the foreclosure, an order authorizing the sale is entered. Once the order is entered, the mortgage holder publishes notice of a the sale for six weeks in a local newspaper. The sale often takes place at the courthouse in the county of the property. Following the sale, the court will enter another order confirming the amount received and entering a deficency judgment against the homeowner, if applicable. The homeowner has an additionial six months following the date of the sale before the winning bidder may take possession.
The other, and most common, type of foreclosure is called a foreclosure by advertisement. Most mortgages authorize the mortgage holder to foreclosue using this faster and less expensive method.
With a foreclosure by advertisement, the mortgage holder sends an acceleration letter demanding the full amount of the mortgage due from the homeowner. The mortgage holder must then give the homeowner 30 days to request a modification through a local housing counseler. If a modification is requested, there are certain statutory guidelines the mortgage holder will review to determine if the homeowner is eligable.
If the homeowner is not eligable, the mortgage holder provides written notice of a denial, then proceeds to publish notice of a public sale for four weeks in a local newspaper. A notice of the sale is also posted to the door of the residence, if applicable. Like a judicial foreclosure, the sale usually takes place at the courthouse in the county where the property is located. The local sheriff will issue the winning bidder (usually the mortgage holder) a Sheriff's Deed, granting the purchaser possession of the property on a certain date. That date is usually six months after the sale. If the home is abandoned, the purchaser can shorten that period to 30 days.
In both types of foreclosure, the time between the sale and the purchaser obtaining possession is called the redemption period. During that period, the prior owner has the right to tender the full balance due to the purchaser, plus fees, costs, and interest. The money can come from any source, including proceeds from a sale of the property if a willing buyer can be found during the redemption period.
At the end of the redemption period, the purchaser will send occupants of the propery a notice requesting that they vacate. If the occupants do not vacate, the purchaser will file a summary eviction proceeding in the local district court. This process typically takes 30 days or less. At the end of that process, the purchaser will obtain a writ of eviction, ordering the local sheriff to remove any occupants and their personal property from the home.
Bankruptcy can delay or prevent either type of foreclosure. Also, litigation over whether the proper procedures are followed can also delay a foreclosure or reinstate a mortgage. Timing, however, is a very important consideration and should be discussed with a knowledgable local attorney.