- The state of Michigan offers two methods of foreclosure. The judicial method requires the lender to go to court and obtain an order mandating the foreclosure of the property. The court will generally set a deadline for the borrower to make the necessary payments. If the payments are not made, then the home will be sold to the highest bidder.
- The non-judicial process allows the lender to foreclose without a court order. This is accomplished through a power of sale clause, which is inserted into the mortgage contract. This states that the lender has the right to foreclose the property in the event that the borrower does not meet the financial terms of the mortgage agreement. The power of sale clause typically specifies the terms of the sale. In the event that this does not occur, then the state of Michigan does have certain minimum standards. The lender must place a notice of sale in the local newspaper for a minimum of four weeks. This notice must also be visible on the property a minimum of 15 days after the first newspaper advertisement is published. The auction must take place between 9:00 a.m and 4:00 p.m. on the advertised date and the home must go to the highest bidder.
- When the property sells for less than the balance due on the mortgage loan, a deficiency has occurred. When this happens, the state of Michigan allows the lender to obtain a judgment that requires the former borrower to pay this difference.
- A right of redemption gives the borrower one last opportunity to reclaim the property. Once the auction is complete the borrower may redeem the home by paying the full balance of the mortgage plus any costs associated with the foreclosure proceedings. In Michigan, the amount of time the borrower has to do this varies based on the terms of the contract and the type of foreclosure method being used.
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