When banks initiate the foreclosure process for failure to make payments, they must follow specific requirements as outlined by the state in which the property is located. These requirements are guidelines that tell the bank what it has to do, when it has to do it and what it has to do to complete the step.
During the entire foreclosure process, the borrower still retains rights in all states. Banks can’t simply seize the home, evict the borrowers and sell the home to someone else whenever they want. They must follow the process the state outlines in its foreclosure rules and regulations.
There are times, though, when banks may try to fast-track the process so they can evict a borrower quickly to regain their asset and unload it to someone else. When this occurs, they may change the locks on the home to ensure that the borrower doesn’t have access to the property anymore.
But, what can you do if the bank has changed the locks before they’ve reached the proper stages of the foreclosure process? We’ll examine borrowers’ foreclosure rights in Michigan below.
Can the Bank Change Your Locks?
Eventually, the bank has the right to change the locks on your home during a foreclosure. But, in Michigan, this can’t happen until the borrower officially abandons the home. When this happens, the bank has the right to change your locks so that it can protect what’s now their asset.
A borrower can be determined to abandon the home three ways – if they choose to leave the property voluntarily, if they agree to a “Cash for Keys” deal, or if they’ve been evicted.
The first of those three options is simple to understand. It happens when you decide to leave the home on your own to find other housing. In this situation, the bank simply changes the locks to prevent unauthorized people from accessing it as they take control of it and try to sell it.
The other two options are a little more complicated.
Cash for Keys
In a “Cash for Keys” agreement, the bank will provide the borrower with cash in exchange for leaving the home before the redemption period has ended. This allows the bank to attempt to sell the home without having to wait the typical six-month redemption period before they can proceed, allows the new owner to take possession of the home after a sheriff’s sale and/or eliminates the need for a costly eviction process.
In exchange for this courtesy, the bank will pay the borrower an agreed-upon sum. The amount of money is usually negotiable on a case-by-case basis. This money will help the borrower pay for the up-front moving costs, to find new housing, or pay for other expenses.
If the bank and the homeowner can’t come to an agreement on abandoning the home, then the bank has the right to proceed with an eviction. In Michigan, this is an official court process that can’t even begin until the redemption period is over.
In order to evict a borrower from a home, the bank must file a complaint and summons with the local district court. If the home has been sold to a new owner at sheriff’s sale, then the new owner must file this paperwork with the court after the redemption period has expired. If the eviction is filed during the redemption, then the eviction will be dismissed..
Once this happens, the borrower receives a notice that an eviction has been filed. It’ll include a timeline for when a hearing will take place, and when you must respond if you wish to.
If a court were to order an eviction after the hearing, then the borrower typically has as many as 10 days to vacate the home. If there is a new owner of the home, you could always work out an arrangement for a longer period if you need to.
Should you attempt to stay in the home beyond that date, the court can order the local sheriff to force the eviction and physically remove you and all your belongings.
When Can a Foreclosure Eviction Happen in Michigan?
In Michigan, an eviction as part of a foreclosure cannot proceed until after the redemption period has ended – and the redemption period won’t even start until after the home has been sold at a sheriff’s sale.
What’s more, a sheriff’s sale can’t even be scheduled until 120 days after the borrower first missed their payment. Even then, the sheriff’s sale date must be published for four weeks before it is held.
Here is the typical timeline for foreclosures in Michigan …
Borrowers are considered delinquent on their payments if they miss their payment by one day. During the early stages following the delinquency, the bank will notify the borrower that they are late – with live contact – and provide options for making good.
On Day 45, the lender has to assign one contact point for the homeowner and also provide them a written notice that they’re delinquent on their mortgage, along with options for loss mitigation.
From that point until Day 121, borrowers are able to work with the lender to work out options for making up for the delinquency.
Day 121-Four More Weeks
At Day 121, if the borrower and lender are unable to come to an agreement, the lender is able to start the foreclosure process. In Michigan, this can be done in two ways: either through foreclosure by advertisement or judicial foreclosure.
Before the sale is allowed to be held, if foreclosure is being sought by advertisement, a notice must be published in a county newspaper for four weeks in a row. Notice of the sale also has to get posted on the property itself within two weeks of the first notice of publication.
Six More Months
After the sheriff’s sale has finished, the foreclosure enters what’s known as the Redemption Period. In most cases, this lasts six months in Michigan.
During this time, borrowers have various options depending on their situation. Borrowers have the right to redeem the property by paying the entire amount paid at the foreclosure sale, plus interest and fees, to redeem the property. If they’re able to do so, they will take back ownership of the home. The borrower also has the right to sell their home through a traditional sale such as the Multi-Listing Service to obtain fair market value for the home. This can be risky as the borrower is limited on the time frame to actually sell the property. Finally, if the borrower believes the foreclosure was done improperly they can file a suit and petition the court to set-aside the sale and force the lender to start over or workout an alternative resolution.
Only after all of this time has passed can the lender even begin the eviction process.
Work with an Experienced Law Firm if the Bank Has Changed the Locks
As you can see above, a bank can’t simply change the locks before a foreclosure in Michigan. They must follow set processes and procedures that will take months to complete. At the very least, it will take nearly 150 days from the time of the first missed payment for the bank to even hold a sheriff’s sale. Even then, the borrower will have six more months to redeem the property.
The lender can then only start the eviction process after that point. Remember, the only time a bank can change the locks on a property in foreclosure is after the borrower has abandoned the home.
If the bank has changed your locks before they’re allowed to in a foreclosure, it’s important you work with an experienced law firm that can protect your rights. Babi Legal Group has more than 20 years of combined real estate experience, and can help you defend yourself against a bank that has changed the locks on you during foreclosure.
Contact us today to learn more.