By Brenda Long, Michigan State University Extension
Mortgage foreclosure rates have significantly decreased during the past ten years, according to the ATTOM report in January 2018. The number of foreclosure filings in 2017 in Michigan decreased by 42.5 percent compared to 2016.
A common misconception for homeowners in foreclosure is that they have to move out of their house before the sheriff sale. When a county deputy or appointed county official posts a notice with the sale date near their door, many people think that is the last date they can stay. However, Michigan law says that those individuals have rights to occupy the house usually for six more months. Some homeowners abandon their property early, paying rent without making an informed decision.
Homeowners do have rights during foreclosure, which were discussed in my November 2015 article. After a property is sold at a sheriff’s sale, a foreclosure sale, there is a redemption period. For most properties it is a six month period. If the homeowner moves out and the property has been declared abandoned, the redemption period can be shortened to one month. For some large properties and those with a lot of equity, more than two-thirds of the loan has been paid, the redemption period may be longer.
During the redemption period, the homeowner(s) can continue to live in the property and are not required to make any mortgage payments. They can use this time to save funds and plan their next steps. The homeowner also has the right to sell the property to another person, but if the sale price is for less than the mortgage owed, the bank has to agree to the short sale.
If the homeowner can find funds to buy back the property then they can keep it. That is why this time is called a redemption period. At the sheriff’s sale, the purchaser paid a certain amount of money to purchase the property. Often the purchaser will be the homeowner’s mortgage company, although it could also be another third party. The amount necessary for the homeowner to buy back or redeem the property is the amount the purchaser paid plus some allowable costs and a daily interest rate based upon your mortgage loan interest rate. A homeowner can learn the sale price for the property by obtaining a copy of the sheriff’s deed from the Register of Deeds in the county where the property is located. They only have to pay the purchase price from the sheriff’s sale even if it is substantially less than the loan amount.
Before moving, if that is the choice, the homeowner should check with their county Register of Deeds office to be sure the property was actually sold.
Going through foreclosure is the right option for some Michigan homeowners. Knowing that they can continue living in their house with no mortgage payments for six months after the sheriff sale can keep a roof over their head and provide time to plan next steps. They should also know their rights during their redemption period.
Michigan State University Extension has released a toolkit, now in both English and Spanish, for homeowners who are experiencing or have previously experienced foreclosure. This toolkit will equip these individuals and families with tools to help them recover their financial stability in the case that a recovery of their home is not possible. The toolkit is available to download free at MIMoneyHealth.org.
For more information about foreclosure in Michigan, go to the housing link at www.mimoneyhealth.org or www.michigan.gov/mshda. Michigan State University Extension offices in several counties have certified foreclosure counselors you can talk to for free about your rights and assist you to think about your options in the foreclosure process.
