Understanding the Michigan Foreclosure Process

Every state has different home foreclosure laws, and Michigan is no exception. While the process is generally very similar from state to state, understanding the specifics of the Michigan foreclosure process is important for understanding what could happen to your home if you stop making mortgage or property tax payments. 

Let’s dive into the complicated procedure of the Michigan foreclosure process. 

Michigan Foreclosure Process: Understanding Foreclosure Types

Here is an overview of the Michigan foreclosure process: if you are unable to make your mortgage or property tax payments, eventually your home will go into foreclosure. If, after a prescribed length of time, you aren’t able to pay back the money you owe to your lender or to the county, your home will be foreclosed on. That means that your lender or county will repossess the home, and then put it back on the market to sell and recover those missed payments. 

While this can sound frightening, there is good news for Michiganders: the Michigan foreclosure process offers plenty of warning signs when your home is in danger of foreclosure, and homeowners usually have a few options available to them in order to avoid foreclosure. 

Before we take an in-depth look at the Michigan foreclosure process, it’s important to understand what type of foreclosure you might be facing: mortgage foreclosure or tax delinquent foreclosure. Continue reading to learn more about each type. 

Michigan Mortgage Foreclosure

Michigan mortgage foreclosure occurs when a homeowner stops making mortgage payments to their mortgage lender. Your lender is the bank to who you make your mortgage payments. If you stop making mortgage payments, you are at risk of a Michigan mortgage foreclosure. 

Michigan Tax Delinquent Foreclosure

Michigan tax delinquent foreclosure occurs when a homeowner stops paying their property taxes. In Michigan, you pay property taxes yearly, and you are taxed based on the estimated value of your home. If you stop paying your property taxes, you are at risk of a Michigan tax delinquent foreclosure.

Understanding the Michigan Foreclosure Process

There are different foreclosure processes in Michigan for each of these two types of foreclosure. You will want to follow the foreclosure process for your specific type. To help you understand the different foreclosure processes in Michigan, we explain each one in depth below. 

Michigan Foreclosure Process if You Fall Behind on Mortgage Payments

If you’ve fallen behind on your mortgage payments, it’s important to understand how the Michigan mortgage foreclosure process works. 

In the state of Michigan, mortgage foreclosures are non-judicial. This means they are settled out of court, and your lender doesn’t need a court order to sell your home at a public auction after you’ve been delinquent for 120 days. 

Let’s take a look at each stage of the Michigan mortgage foreclosure process:

• Days 2-36 after a missed payment: You are considered in default the day after you miss a payment on your mortgage. However, most lenders have a 15 or 20-day grace period. If you know you are going to have trouble making payments, now is the time to have a conversation with your lender. 
• Day 45 after a missed payment: If you haven’t yet talked to your lender by day 45, they will send you an official, written notification that you are in default on your loan. They are also required to assign a point of contact or agent to your case so you have someone specific to call with any questions or negotiations. They may also provide you with additional options for remedying the situation. 
• Day 121 after a missed payment: Your lender is allowed to start the foreclosure process. They will schedule a sheriff’s sale date. They are required to publish the date of the sale four weeks beforehand, along with details of the debt. Your lender will also post a notice on your property.
• Sheriff’s Sale: Homeowners still have the opportunity to work something out with their lender until the date of the sheriff’s sale. You may be able to arrange a short sale, accept a cash offer for your home, or work with your lender to find a reasonable repayment plan. 
• Redemption Period: In the Michigan foreclosure process, homeowners typically have a six-month redemption period. If you owe less than a third of your original loan, you may have a 12-month redemption period. During this time, you can live on the property and even sell or buy back your property. However, homeowners do have to allow whoever purchased the home at the sheriff’s sale to inspect the home upon reasonable notice. 
• Michigan Foreclosure Process is Complete: The process is complete, and the homeowner has to leave their home. 

While this process can feel intimidating and stressful, there is a lot of time between when you first miss a mortgage payment and when eviction happens. This gives you the opportunity to find a solution, keeping in mind that lenders generally do not want to foreclose on your home. For lenders, it’s easier to work out a solution that gets you back on track for your mortgage payments. If you’re currently in the middle of the Michigan foreclosure process, do your best to get in contact with your lender to see what your options are. 

Michigan Foreclosure Process if You Fall Behind on Property Taxes

In Michigan, the property tax foreclosure process is much different than the mortgage foreclosure process. Instead of owing money to your lender, you owe money to your county. 

The property tax foreclosure process in Michigan is a three-year process. Property taxes have priority over any other lien on a property, which means that if you fall behind on your property taxes, your lender might step in to pay those taxes. Lenders will then require additional payments from the homeowner in order to cover those taxes that they paid on their behalf. 

If you miss a property tax payment, the sooner you start making payments, the better. The longer you wait to pay, the more fees will pile up, and homeowners are required to pay back everything that they owe in full.

Here’s how the Michigan tax foreclosure process works:

• March 1: Michigan property taxes are due to the county by February 14. If you have not paid those property taxes, your county will be notified, and your property will be marked delinquent on March 1st. The county will add a 4% administration fee and a 1% monthly interest rate to the amount you owe. 
• County Notices: The county will send you three notices before your property is considered forfeited. Those notices are sent out in June, October, and the following February. By February of the second year, the county is allowed to post notices of delinquent properties in the newspaper. 
• March 1, Second Year: If you haven’t paid off property taxes by the following year on March 1, the county considers your property forfeited. In order to redeem your property, you would have to pay back all of your taxes and accrued fees in one lump payment. Residents are still able to live in their homes. 
• Certificate of Forfeiture: In April of the second year, the county will officially record a certificate of forfeiture, stating how much property taxes are owed, and that the homeowner has not paid those taxes. 
• Show Cause Hearing: The Foreclosing Governmental Unit will schedule a show cause hearing, where you have an opportunity to explain why your home should not be foreclosed on. The FGU is required to notify you of the date of this hearing, and it’s important that you attend. This is one of your last chances to redeem your home before it is foreclosed upon.
• March 30, Third Year: If you still have unpaid property taxes in the third year, the circuit court has to make a decision on your property. The courts will make a decision to foreclose or not foreclose on your home.
• March 31, Third Year: If the courts decide your home should be foreclosed on, or if you did not attend your show cause hearing, this is the date of foreclosure and the date that you must leave the premises. 
• July-August, Third Year: The county will auction off your home in an attempt to recoup the costs of the unpaid property taxes. It’s too late for homeowner to redeem their home by paying back the taxes they owe. 

The Michigan foreclosure process for unpaid property taxes is long. You have almost three years to pay back your taxes. If you’re not sure what to do and your home is in danger of foreclosure, it’s important to know that you still have options. You don’t have to wait for your lender or the county to take your home. 

Avoid Foreclosure with Hometown Development

If you’re hoping to avoid the Michigan foreclosure process, our professional team at Hometown Development can help. We purchase properties in any condition, for cash, and we can close in as little as five days, helping you get out from under that foreclosure quickly. Contact us online, or give us a call at 616-379-3090 to see how we can help.