The foreclosure process can take a while in most states. In Michigan, mortgage companies can’t even begin the foreclosure process until a borrower is at least 120 days past due on their payments.
Even then, a sheriff’s sale can’t be held for at least four weeks after the foreclosure notice is posted on the home’s front door.
In other words, foreclosures don’t happen overnight, no matter what state you’re in.
When a mortgage company intends to foreclose on a property, they need to make sure that their asset is protected in the meantime, and that the public also knows it’s happening. To do this, the lender will file either what’s known as a lis pendens or notice of default, depending on the type of foreclosure being pursued and what state you are in.
Here are some more details about what a lis pendens is and how it applies in foreclosures.
What Does Lis Pendens Mean in Foreclosure?
Lis pendens is a Latin phrase that essentially means “suit pending.” In this sense, it’s a public notice that lenders will initiate when they begin the foreclosure process.
The idea behind a lis pendens is to notify the public that there is a lawsuit pending on the property in question. It puts a mark on the property’s title so that it won’t be sold easily.
By filing a lis pendens, a lender will be making it very difficult for the borrower to sell the home, since buyers typically aren’t interested in acquiring properties that have clouded or bad marks on the title.
Lis pendens are filed directly with the recorder’s office in the county in which the home is located, typically known as the register of deeds office. It’s a public record file that notifies anyone who wishes to research the title history and determine the condition of title on a property .
This type of document can actually be used in a number of situations in which there is a dispute on a property, including in divorces, when a will is being contested, when a contract is being disputed and when the homeowner hasn’t paid property taxes.
When is a Lis Pendens Filed in Foreclosures?
A lis pendens is typically filed in all judicial foreclosures. This type of process requires the lender to start the judicial foreclosure process by filing an official lawsuit with the county in which the property is located. However, a lis pendens is not required to be filed when foreclosing by advertisement.
Along with the actual lawsuit, the lis pendens notice will be filed with the recorder’s office. The states that require lis pendens to be filed say that it must accompany the actual foreclosure complaint.
This is where a lis pendens in foreclosure differs from other disputes. In a divorce, for instance, a lis pendens is allowed to be filed on a property, but it’s not a requirement.
Contained in a typical lis pendens is a full description of the property in question, as well as the described nature of the exact claim against it.
In all, 22 states require judicial foreclosures and the lis pendens that go along with it. While Michigan does have judicial foreclosures, they are not very common. Instead, most foreclosures in the state of Michigan are non-judicial foreclosures by advertisement and require a notice with a slightly different name.
For non-judicial foreclosures, lenders have to record what’s known as a notice of default. This notice will take the place of a lis pendens, but serves a very similar purpose. It, too, is a notice that informs the public of pending action against a property, and it also has to be filed with the recorder’s office in the county in which the property is located.
Unlike a lis pendens, though, a notice of default will usually contain very specific information that outlines the details about the loan that’s in default.
Once the notice of default or lis pendens is filed, the property in question is considered to be in what’s called the pre-foreclosure phase. This phase will last until that property is finally sold.
Details of Lis Pendens and Foreclosure in Michigan
As mentioned before, a lis pendens or notice of default can’t be filed by the lender until the borrower is at least 120 days behind on their monthly mortgage payment. Up until that time, the lender is required to take certain steps to notify the borrower of the missed payment and options for making it right.
The first written notification of delinquency happens on Day 45 after the missed payment, at which time the lender has to assign the homeowner a single point of contact for the case, as well as their options for loss mitigation.
Once Day 121 hits, the lender is free to file the lis pendens (in judicial foreclosures) or notice of default (in non-judicial foreclosures).
From that point, a Sheriff’s Sale will be held to sell the property to the highest bidder. However, this cannot occur until public notice of the upcoming Sheriff’s Sale has been advertised weekly for four weeks leading up to the date of the sale.
Even after the property is sold at Sheriff’s Sale, homeowners in Michigan enter what’s known as the redemption period, which commonly lasts six months. During this time, the homeowner can redeem the property by paying the entire foreclosure sale amount, by refinancing their mortgage, and selling their property on the fair market.
Know Your Rights in a Lis Pendens Foreclosure
Lis pendens sounds like a fancy legal term, but all it means, essentially, is that a suit is pending. In the case of a property foreclosure, it notifies the public that a lender has started foreclosure proceedings against a homeowner who is in default of payment.
If you are facing a lis pendens or notice of default foreclosure in Michigan, it’s important to know what your rights are. The simple filing of either of these notices doesn’t mean you have to give up your home. In fact, there’s still plenty you can do to resurrect the situation.
That’s why it’s important that you know your rights and the steps you need to take to protect yourself. At Babi Legal Group, we have been helping homeowners like you for over 15 years to solve real estate disputes such as foreclosures.
Contact us today to find out how we can help you.