Foreclosure process in Michigan (MI)Topic: Foreclosure
In Michigan a bank can choose either judicial or in-court foreclosure or non-judicial or out of court foreclosures. As with all states where both methods of foreclosure maybe used, the determining factor as to which process the bank will choose is whether or not the deed of trust or mortgage contains a power of sale clause. It is the power of sale clause that allows the bank to forgo the time and expenses of filing a lawsuit against the homeowner who is having trouble making his payments, to begin the foreclosure process. Since it is in the banks best interest to spend as little as possible on the process and move it along as quickly as possible, the bank will always choose to use non-judicial foreclosure when it can. The only time a judicial foreclosure will be used is when there is no power of sale clause in the deed of trust or mortgage. When no power of sale clause exists, judicial foreclosure is the banks only option.
To follow this course of action, the bank files a lawsuit against the home owner asking the court to find the homeowner officially in default. When this has been obtained the judge/court will tabulate the amount that the home owner owes and give him or her a short time to come up with that amount of money. If during this allotted time the homeowner is unable to pay this money, then the home will be scheduled for sale. The court actually must issue the notice of sale. Following this action, the process moving forward, the sale date is followed the same way, whether it is a judicial or a non-judicial foreclosure. When a power of sale clause is very specific in the details of how the sale is to be conducted, those instructions must be followed. In such a case the date-time and terms of the sale will be laid out in the deed of trust or mortgage. Such detailed, instructions are not. Usually included in a power of sale clause in all instances where those details are not included in the power of sale clause, the 1st step is that a notice of sale must be advertised once a week for four weeks. This ad must be run in a newspaper with circulation in the county where the house is located. A copy of the notice of sale must be physically posted on the home in question as well. This posting of the notice must be placed on the home following the first day the ad is run in the newspaper. This notice of sale must include the names of the home owner and the bank. It must contain a description of the property and the date, place, time and terms of the auction.
The auction can either be conducted by the bank's Lawyer, referred to in most cases as by trustee or the courts sheriff. The sale will always be held between nine are and four pm on the date listed in the notice of sale. The home will be awarded to the person making the highest bid at the auction. Postponement of the sale can be arranged at the discretion of the bank. Postponements of less than one week will only need to be announced by posting the new sale was originally to be held. Postponements longer than one week must be advertised in exactly the same manner as the originally scheduled sale was done.
In Michigan, when a judicial foreclosure has been used, the former home owner is given one year right of redemption following the sale of the home. This means that for one year following the sale of the home the person who lost the home at the sale can regain ownership of the home. They may do this by paying the amount of the winning bid at auction, plus interest.