Foreclosure is one of the most serious consequences a homeowner can face. Michigan law provides homeowners with significant procedural protections during the foreclosure process, including a right of redemption after the foreclosure sale that is among the most generous in the country. Coventry Enterprises LLC reviews transactions where foreclosure-related compliance issues arise, with particular attention to whether lenders and servicers have followed the required procedures.
Michigan's Foreclosure Process
Michigan allows two types of residential foreclosure: foreclosure by advertisement (nonjudicial) and foreclosure by judicial action. Most residential foreclosures in Michigan proceed by advertisement, which does not require a court filing but does require the lender to follow a specific statutory sequence of publication and notice requirements.
After the foreclosure sale, Michigan law provides a statutory redemption period during which the homeowner can reclaim the property by paying the full sale price plus interest and costs. For most residential properties, the redemption period is six months. During the redemption period, the homeowner generally has the right to remain in the property.
Lender Obligations Before Foreclosure
Federal law imposes obligations on mortgage servicers before they initiate foreclosure. Under RESPA, servicers must make reasonable efforts to contact borrowers who fall behind on payments, inform them of available loss mitigation options, and evaluate any complete loss mitigation application before proceeding with foreclosure. These requirements are commonly known as the dual tracking prohibitions: servicers cannot pursue foreclosure while a complete loss mitigation application is pending.
Michigan law adds additional protections. Servicers must provide a notice of default and intent to accelerate before initiating foreclosure proceedings. Coventry Enterprises LLC has reviewed cases where this notice was not properly provided, or where servicers proceeded with foreclosure while a loss mitigation application was under review, both of which represent violations of applicable law.
Predatory Practices in the Foreclosure Context
Homeowners in financial distress are targets for predatory operators who represent themselves as offering foreclosure rescue services. These operators sometimes ask homeowners to sign over title to their property in exchange for a promised opportunity to repurchase after the operator saves the property from foreclosure. These equity skimming schemes are illegal under Michigan law and can result in homeowners losing their properties with no benefit in return.
Loss Mitigation Options Available to Michigan Homeowners
Homeowners who are behind on their mortgages have options besides foreclosure. Loan modification can restructure the loan to make payments more manageable. Repayment plans allow homeowners to catch up on missed payments over time. Forbearance agreements temporarily suspend or reduce payments during a period of hardship. Short sales allow homeowners to sell the property for less than the amount owed with the lender's approval. Each of these options has specific procedural requirements and consequences that homeowners need to understand before choosing a path.
For resources on Michigan housing law more broadly, see Michigan housing law. For information on consumer protection in the lending context, see consumer protection.
Foreclosure-Related Compliance Concerns?
If you have concerns about a foreclosure proceeding or a lender's compliance with required procedures, contact Coventry Enterprises LLC.
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