The information below is a basic summary of the law. It is not legal advice. The facts of every person’s case are different, Therefore, you should consult with a housing counselor and/or an attorney to obtain the best advice for your particular situation.

1. What is the process for mortgage foreclosure in Michigan?

Michigan has two processes- judicial foreclosure and foreclosure by advertisement.

Foreclosure by advertisement generally

Foreclosure by advertisement is the most common method of foreclosure in Michigan. If a mortgage is foreclosed by advertisement, the foreclosing entity must advertise that the home will be foreclosed and sold in a local newspaper in the county where the home is located. The advertisement must run for 4 consecutive weeks. Within 15 days after the first advertisement is published, the foreclosing entity must post a copy of the notice in a noticeable place on the premises, which is usually the door. A sheriff’s sale can take place anytime after the advertisement of sale has run for 4 consecutive weeks.

If no legal action is filed to stop the foreclosure, and the home is sold at a sheriff’s sale, the homeowner has a 6-month redemption period. The redemption period is important because it allows the homeowner to redeem the property by paying the amount the property sold for at sheriff’s sale, plus applicable interest. If the home is redeemed the homeowner obtains the property free and clear (the mortgage is extinguished). If the homeowner is not able to redeem the property during this 6-month period, the foreclosing entity can file a complaint for eviction in the local district court. The homeowner has a right to appear in court and present some defenses on his or her behalf. Tenants have limited rights as well.

In some instances the redemption period may be for a 1-year period instead of 6 months. 1 year redemptions apply for: mortgages that were executed before January 1, 1965; commercial, industrial, or multi-family residential property in excess of 4 units, a property that is more than 3 acres in size and the outstanding debt is less than 66.66% of the original debt.

Judicial Foreclosure generally

Judicial foreclosure is rarely used compared to foreclosure by advertisement. If a property is foreclosed judicially, the foreclosing entity must file a lawsuit against the homeowner of the property. The homeowner can present defenses on his or her behalf. The foreclosing cannot sell the property unless the foreclosing entity wins the lawsuit and at least 6 months has passed since the lawsuit was filed. After 6 months have passed, the court may order a sale of the property; there is an additional 6-week publication requirement following the initial 6-month period before the sale can be held. The homeowner still retains an additional 6-month redemption period. The redemption period is important because it allows the homeowner to pay the amount the property sold for at sheriff’s sale, plus applicable interest and any tax or insurance payments that were made by the foreclosing entity during the redemption period. If the home is redeemed the homeowner obtains the property free and clear (the mortgage is extinguished). If the homeowner is not able to redeem the property during this 6-month period, the foreclosing entity can file a complaint for eviction in the local district court.

IT IS ALWAYS BEST TO SEEK LEGAL HELP AS SOON AS POSSIBLE. Anyone living in a home that is being foreclosed should seek legal help as soon as they become award of the situation. Please contact our office if you have received notice that your home will be or was sold at a sheriff’s sale. The chances of being able to win a legal action to stay in your home are significantly greater if you take action EARLY. 

2. What is the process for tax foreclosure in Michigan?

Tax foreclosure is a 3-year process. Parcels are forfeited to the local county treasurer when property taxes enter the second year of delinquency. If property taxes remain unpaid as of March 31 in the third year of delinquency, the parcel is foreclosed upon by the county treasurer. If a parcel is not redeemed, a public auction will be held after ____ of the third year in delinquency. The minimum bid required to purchase a parcel at the public auction is the amount of the property taxes owed, interest, and other applicable charges that may have been levied such as a delinquent water bill. Some counties have a second auction, with lesser bidding requirements for parcels that do not sell in the first auction.

3. What can I do to save my home from mortgage or tax foreclosure?

The most important thing you can do when facing foreclosure is to act early and seek legal counsel. In the case of mortgage foreclosure, and if a sheriff’s sale has not occurred, visit a housing counselor to seek help in obtaining a forbearance (period of time where payments are waived) and/or a modification of the loan to obtain affordable payments.

You should also check to see if your lending institution participates in the Michigan Step Forward Program, www.stepforwardmichigan.org. There may be money available to help you catch up on your mortgage. If a sheriff’s sale has occurred, try to redeem the property or contact an attorney to determine if you have legal defenses and if a legal action can be filed on your behalf. You must attend all of your court dates if an eviction case is filed against you in the district court. Finally, you do not have to vacate your home unless and until a judge issues an order of eviction.

In the case of tax foreclosure, you may request a payment plan or an extension to pay your taxes. Payment plans are typically divided into monthly payments. If you miss a payment, you may forfeit the plan and lose your home. An extension is typically for an additional year without scheduled monthly payments. However, if the balance is not paid when due, the home or lot may proceed to auction the following year.

IT IS ALWAYS BEST TO SEEK LEGAL HELP AS SOON AS POSSIBLE. Anyone living in a home that is being foreclosed should seek legal help as soon as they become award of the situation.

4. What are my rights as a tenant?

If you are tenant residing in a mortgage foreclosed property you may be eligible for protection under the Protecting Tenants at Foreclosure Act. This means the new  owner needs  to  end your  tenancy  by  providing  you  with a  90 day  notice  to  leave before filing an eviction case in the local district court.     

If you have a lease that is not expired and has more than 90 days remaining on its term, the new owner must honor your lease before an eviction case can be filed.

There are limits on the Protecting Tenants at Foreclosure Act. In order for it to apply: 1) You can’t be a spouse, child, or parent of the former owner, 2) your rent  cannot  be  substantially less than  that  paid  for  similar  properties  in  the  area,  unless  the  rent  is  reduced because  of  a  federal  or  state  rent  subsidy, and 3) the  lease  or  rental  arrangement  must be an  “arm’s  length  transaction” which  means that the parties did not have any personal or business relationship to one another before entering into the rental agreement.

Finally, if you are a tenant in mortgage or tax foreclosure you do not have to vacate your home unless and until a judge issues an order of eviction.

5. Do I have to allow an interior inspection of my home if it is in foreclosure?

If you are in mortgage foreclosure and your home is in the redemption period, the foreclosing entity only may request to inspect the interior of the home with at least 72 hours notice. The inspection must occur at a reasonable time during the day. It is your right to refuse to permit an interior inspection. You may provide evidence (ex. Pictures) that the interior of the property is in fair condition. However, an aggressive entity could start eviction proceedings within 5 days if you do not respond to, or refuse a request for entry, if it believes there is actual or imminent damage to the home.

This is a recent and controversial change in Michigan’s foreclosure law which we belive alters an individual’s prior rights to privacy during the redemption period, and can be dangerous if you unknowingly allow an unauthorized person into your home. Therefore, if you do not feel comfortable with the request for inspection, are unsure of the identity of the person or company making a request, or have any other questions, please contact an attorney for advice IMMEDIATELY.

6. How can I apply for social security benefits?

7. How do I apply for a poverty property tax exemption?

Each municipality in Michigan must offer a property tax exemption program for homeowners that are at or below the property level. The programs vary greatly between communities. If you believe that you are eligible for a poverty tax exemption, you should request information from your local municipality. In Detroit, an application is available at the City Assessor’s Office, currently located in room 804 of the Coleman A. Young Municipal Building, 2 Woodward Ave, Detroit, MI 48226.

You must apply for an exemption every year. Exemptions are not retroactive.

8. How can I get an appointment for help and what should I bring to my appointment?

If you have a mortgage or land-contract related concern you may come to our office Monday, Wednesday, Friday, from 9:30am-11:30am for open intake, or you can call and arrange for an appointment. Please bring as many of the following items as possible:

• a copy of your identification

• most recent mortgage statement

• copy of your mortgage, deed, or land contract

• modification or forbearance agreement (if applicable)

• demand letters (if applicable)

• reinstatement letter (if applicable)

• copy of sheriff’s deed (if sale occurred)

• all court papers (if an eviction action has been commenced against you)

If you have a tax related concern you should visit our partner organization, United Community Housing Coalition’s, open intake hours from Monday, Wednesday, and Friday from 9am-12noon.