When homeowners fail to meet the requirements of their mortgage, lenders will often proceed with a foreclosure to reclaim their property. This is done because the property itself is what’s used as the collateral to secure the loan.
Until the borrower pays the loan off, the collateral — the property in this case — remains an asset they can seek to recover to pay the outstanding balance owed. The lender then has the right to foreclose on the property when the borrower doesn’t pay the agreed-upon mortgage.
While there are different processes and requirements that are set by each individual state, the end goal of foreclosure is the same — to reclaim the unpaid balance owed through the collateralized property.
Despite a formal foreclosure process taking place, there are sometimes when the lender will need help to remove former owners from the property once a sheriff’s sale has gone through. This is done through what’s called a writ of assistance.
Let’s dive deeper into how this works.
The Foreclosure Process in Michigan
In Michigan, majority of mortgage payments are due on the first of the month, and are considered delinquent as of the second, unless a grace period is offered. Lenders are able to assess late charges for any late or missed payment, though they are required by state law to make a live contact with a borrower to discuss options they have for loss mitigation.
If the payment hasn’t been made by Day 45, the lender will assign a point of contact for the borrower and provide them with written delinquency notification as well as their options for loss mitigation.
In most instances, from this point until Day 121, borrowers are able to work with lenders directly on these options, which could include partial payments or a modification of the loan.
The foreclosure process can start on Day 121 if the borrower hasn’t made the proper payment or come to an agreement with the lender. At this point, the lender will schedule a date for a sheriff’s sale, which must be published in a local newspaper four weeks in a row. The date of the sale will also be posted on the property itself two weeks after the first publication date.
The Redemption Period
Michigan foreclosures allow for what’s known as a Redemption period. This starts on the day of the sheriff’s sale and runs for six months after it, in most cases. The redemption period can last up to 12 months if the amount that’s outstanding on the mortgage is two-thirds of the total amount of the original loan or less.
The redemption period for farming property also can be as much as 12 months.
During this period, the borrower is allowed to remain living in the property without having to make any payments. They should maintain the utilities and insurance on the property as well as be responsible for maintaining the quality and upkeep of the property.
The homeowner has to allow the person or entity who purchases the property at sheriff’s sale to inspect the property during this period. Failure to allow the required inspection can result in a Court reducing the allowed redemption period.
They also have the opportunity to redeem the property by paying whatever amount is bid at sheriff’s sale, plus any fees and interest.
Evictions after the Redemption Period
Once the redemption period ends, the borrower must vacate the property. If they haven’t done so voluntarily by this period, the new owner will likely seek a summons for eviction, which would be held in the District Court the property is located in.
If the purchaser at foreclosure is successful in the eviction they will receive an order for possession of the property, then the court will set a date at which the local sheriff to remove the borrower from the property if the borrower doesn’t voluntarily vacate on their own. This is done by an official document called a writ of assistance or an order of eviction.
What is a Writ of Assistance?
A writ of assistance is an official order issued by a court that directs one party to deliver or convey a property, and transfer a deed, right of ownership or document to another party. In the case of a foreclosure, the writ of assistance essentially serves as an official eviction from a property.
The writ of assistance will outline what the homeowner needs to do and by when. Usually, this will simply include a date by which they need to completely remove themselves and their possessions from the property.
The document will also include language that explains what will happen if this isn’t done voluntarily. In Michigan, this means that the local sheriff will show up to the property on the specified date and escort the person off the property and throw out all the personal property in dumpsters that are brought to the property on the day of the eviction.
The sheriff will essentially serve as the overseer, ensuring that the person vacates the property and removes their personal property, and that the locks are changed by a registered locksmith to ensure the new owner is the only one who can access it.
Foreclosures in Rental Properties
When the property being foreclosed on is a rental with tenants on premises, the rules aren’t as straightforward. A writ of assistance can’t simply be issued once the redemption period ends.
How long tenants are able to remain in the rental property, and the other rights they have, depend on a number of factors, including when their lease was signed and how long it lasts for. Some tenants may even be able to make some money in return for vacating the property voluntarily, in what’s known as a cash-for-keys deal.
Know Your Rights in a Foreclosure
If you’re going through a foreclosure in Michigan, it’s very important to know what rights you have. Some lenders will try to force you out of a property — or take the property from you — before you legally have to leave. It’s also key to know when you will be able to reclaim the property through, and what you have to follow to do so.
If you are facing a writ of assistance in a foreclosure in Michigan, you want to work with an experienced law firm that can help guide you through the process. Babi Legal Group has been helping homeowners in these situations for many years now.
The attorneys at the practice have 20 years of combined experience in real estate, with more than 10 years of experience in business, criminal, debt collection and debt settlement law.
Contact us today for assistance if you’re facing a foreclosure in Michigan.