Michigan Foreclosure Procedure

In the State of Michigan foreclosure comes about in two forms: foreclosure by court action and foreclosure by advertisement. 

Foreclosure by Court Action

125.1448 Foreclosure procedures applicable to authority.  Sec. 48.

In addition to other procedures and remedies which may otherwise be available to the authority, the foreclosure procedures set forth in sections 48a to 49u shall be applicable to the authority for the foreclosure of a mortgage or land contract held by the authority and commenced after the effective date of this section.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

125.1448a Jurisdiction to foreclose mortgages and land contracts held by authority.  Sec. 48a.

The circuit court has jurisdiction to foreclose mortgages of real estate and land contracts held by the authority.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

125.1448b Other civil actions.  Sec. 48b.

(1) If a judgment has been obtained in any other civil action for the money, or part thereof, demanded in the complaint in an action to foreclose a mortgage on real estate or a land contract held by the authority, no proceeding shall be had in the action to foreclose unless the sheriff or other proper officer has returned an execution as unsatisfied, in whole or in part, and certified that he or she can find no property of the defendant out of which to satisfy the execution except the mortgaged premises.

(2) After a complaint has been filed to foreclose a mortgage on real estate or land contract held by the authority, while it is pending, and after a judgment has been rendered upon it, no separate proceeding shall be had for the recovery of the debt secured by the mortgage, or any part of it, unless authorized by the court.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981.

125.1448c Bringing amount due into court before judgment of sale; dismissal of complaint.  Sec. 48c.

Whenever a complaint is filed for the satisfaction or foreclosure of any mortgage on real estate or land contract held by the authority, upon which there is due any interest or any portion or installment of the principal and there are other portions or installments to become due subsequently, the complaint shall be dismissed upon the defendant's bringing into court, at any time before the judgment of sale, the principal and interest due, with costs.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

125.1448d Sale of premises pursuant to circuit court order.  Sec. 48d.

Whenever a complaint is filed for the foreclosure or satisfaction of any mortgage on real estate or land contract held by the authority, the court has power to order a sale of the premises which are the subject of the mortgage on real estate or land contract held by the authority, or of that part of the premises which is sufficient to discharge the amount due on the mortgage on real estate or land contract held by the authority, plus costs. But the circuit judge shall not order that the lands subject to the mortgage be sold within 6 months after the filing of the complaint for foreclosure of the mortgage or that the lands which are the subject of the land contract be sold within 3 months after the filing of the complaint for foreclosure of the land contract.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

125.1448e Bringing amount due into court after judgment of sale; stay of proceedings; subsequent default.  Sec. 48e.

If, after a judgment of sale is entered against him or her, the defendant brings into court the principal and interest due with costs, the proceedings in the action shall be stayed; but the court shall enter a judgment of foreclosure and sale to be enforced by a further order of the court upon a subsequent default in the payment of any portion or installment of the principal, or of any interest thereafter to become due.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981.

125.1448f Public sale of land by county clerk, deputy county clerk, or other authorized person; hours; location; sale subject to § 600.6091.  Sec. 48f.

All sales of land on foreclosure of a land contract or mortgage on real estate held by the authority shall be made by the county clerk of the county in which the judgment was rendered or of the county where the land or some part of the land is situated, by a deputy county clerk, or by some other person duly authorized by the order of the court. These sales shall be at public sale between the hours of 9 a.m. and 4 p.m. and shall take place at the courthouse or place of holding of the circuit court for the county in which the land or some part of it is situated or at any other place the court directs. The sale is subject to section 6091 of Act No. 236 of the Public Acts of 1961, as amended, being section 600.6091 of the Michigan Compiled Laws.   History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981.

125.1448g Deed of sale; execution; operation; right, title, and interest vested in grantee; recordation; redemption of premises.  Sec. 48g.

(1) The person making the sale shall execute deeds specifying the names of the parties in the action, the date of the land contract or mortgage held by the authority, when and where it was recorded, a description of the premises sold, and the amount for which each parcel of land described in the deed was sold; and shall indorse upon each deed the time it becomes operative if the premises are not redeemed according to law. Unless the premises or any parcel of them are redeemed within the time limited for redemption the deed shall become operative as to all parcels not redeemed, and shall vest in the grantee named in the deed or his or her heirs or assigns all the right, title, and interest which the mortgagor had at the time of the execution of the mortgage or at any time thereafter.

(2) The deed of sale as soon as practicable, and within 20 days after the sale, shall be deposited with the register of deeds of the county in which the land described in the deed of sale is situated, and the register shall indorse upon the deed the time it was received and shall record the deed at length in a book to be provided in his or her office for that purpose and shall index the deed in the regular index of deeds, and the fee for recording the deed shall be included among the other costs and expenses allowed by law. If the premises or any parcel of them are redeemed the register of deeds shall write on the face of the record the word “redeemed” and shall write at what date the entry is made and sign the entry with his or her official signature.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

Foreclosure by Advertisement

125.1449 Foreclosure by advertisement.  Sec. 49.

Every mortgage of real estate held by the authority which contains a power of sale, upon default being made in any condition of such mortgage, may be foreclosed by advertisement, in the cases and in the manner specified in sections 49a to 49v, including the giving of a notice as described in sections 49b and 49c.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 ;--Am. 1993, Act 221, Imd. Eff. Oct. 29, 1993 .

125.1449a Right of authority to give notice and make foreclosure; conditions; mortgage securing payment of money by installments; installment as separate and independent mortgage; foreclosure and redemption.  Sec. 49a.

(1) To entitle the authority to give a notice as prescribed in sections 49b and 49c, and to make such foreclosure, all of the following are required:
    (a) That some default in a condition of such mortgage shall have occurred, by which the power to sell became operative.
    (b) That no suit or proceeding shall have been instituted, at law, to recover the debt then remaining secured by such mortgage, or any part thereof; 
    or if any suit or proceeding has been instituted, that the suit or proceeding has been discontinued, or that an execution upon the judgment rendered 
    therein has been returned unsatisfied, in whole or in part.
    (c) That the mortgage containing such power of sale has been duly recorded; and if it shall have been assigned, that all the assignments thereof have 
    been recorded.
(2) In cases of mortgages given to secure the payment of money by installments, each of the installments mentioned in such mortgage after the first, shall be taken and deemed to be, a separate and independent mortgage, and such mortgage for each of such installments may be foreclosed in the same manner and with the identical effect as if such separate mortgages were given for each of such subsequent installments and a redemption of any such sale by the mortgagor shall have the identical effect as if the sale for such installments had been made upon an independent prior mortgage.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981.

125.1449b Notice of sale; publication; posting copy of notice upon premises.  Sec. 49b.

Notice that the mortgage held by the authority will be foreclosed by a sale of the mortgaged premises, or some part of them, shall be given by publishing the same for 4 successive weeks at least once in each week, in a newspaper published in the county where the premises included in the mortgage and intended to be sold, or some part of them, are situated. If no newspaper is published in the county, the notice shall be published in a newspaper published in an adjacent county. In every case within 15 days after the first publication of the notice, a true copy shall be posted in a conspicuous place upon any part of the premises described in the notice.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981.

125.1449c Notice of sale; contents.  Sec. 49c.

Every notice required under section 49 shall specify all of the following:

(a) The names of the mortgagor and of the mortgagee, and the assignee of the mortgage, if any.
(b) The date of the mortgage, and when recorded.
(c) The amount claimed to be due on the mortgage at the date of the notice.
(d) A description of the mortgaged premises, conforming substantially with that contained in the mortgage.
(e) The length of the redemption period as determined under section 49j.  
History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

125.1449d Sale of premises at public sale; hours; location; appointed person; highest bidder.  Sec. 49d.

The sale shall be at public sale, between the hours of 9 a.m. and 4 p.m., at the place of holding the circuit court for the county in which the premises to be sold, or some part of them, are situated, and shall be made by the person appointed for that purpose in the mortgage, or by the sheriff, undersheriff, or a deputy sheriff of the county, to the highest bidder.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981 .

If the mortgage contains a power of sale clause and there has been a breach of the terms of the mortgage, such as nonpayment of the loan, then the property may be foreclosed on through a non-judicial foreclosure by advertisement, unless the mortgage is held by the Michigan state housing development authority. Nonpayment of any installment of a mortgage constitutes a separate act which justifies foreclosure.

The notice of a foreclosure sale must be published once a week for four weeks in a newspaper of general circulation in the county where the land is situated. Within 15 days after the first publication, a true copy of the foreclosure notice must be posted in a conspicuous place on the premises described in the foreclosure notice. The lender or the lender's agents have a right to enter the mortgaged premises to post or deliver foreclosure notices.

The sale must be a public sale, conducted between the hours of 9 o’clock "in the forenoon" and 4 o'clock in the afternoon. The sale must be at the courthouse or place where the circuit court for the county tries lawsuits. The sale is to be conducted by the person appointed for the purpose in the mortgage, or by the sheriff, under sheriff or deputy sheriff. The sale must be made by auction to the highest bidder. The sale may be adjourned from time to time by posting a notice of such adjournment at the time and place where the sale would otherwise have been made. Any adjournment for more than a week must also be published in the same newspaper as the original notice, within 10 days from the date the sale was adjourned, and again once per week for each week the sale is adjourned.

The officer or person conducting the sale will execute, acknowledge and deliver a deed to the premises to the high bidder at the foreclosure sale. The deed must specify the last date by which the borrower can redeem the property. The deed must be recorded within 20 days after the sale. The register who records the deed shall endorse the time the deed was received.

If the property is ever redeemed, the register will destroy the deed and record the word redeemed on the face of the special book for foreclosure deeds. The deed and the foreclosure do not wipe out liens or claims that existed prior to the date of the original mortgage.

Redemption

125.1448i Redemption of premises; effect on deed of sale.  Sec. 48i.

The mortgagor; his or her heirs, executors, or administrators; or any person lawfully claiming from or under the mortgagor or the mortgagor's heirs, executors, or administrators may redeem the entire premises sold by paying, within 6 months from the time of the sale, to the purchaser; to the purchaser's executors, administrators, or assigns; or to the register of deeds in whose office the deed of sale is deposited as provided in the court rules, for the benefit of the purchaser, the sum which was bid with interest from the time of the sale at the rate percent borne by the mortgage. The vendee of a land contract; his or her heirs, executors, or administrators; or any person lawfully claiming from or under the vendee of a land contract or the heirs, executors, or administrators of the vendee of a land contract may redeem the entire premises sold within 6 months from the time of the sale by paying to the purchaser; to the purchaser's executors, administrators, or assigns; or to the register of deeds in whose office the deed of sale is deposited as provided in the court rules, for the benefit of the purchaser, the sum which was bid with interest from the time of the sale at the rate percent borne by the land contract. In case the sum is paid to the register of deeds the sum of $5.00 shall be paid to the register of deeds as a fee for the care and custody of the redemption money. After these sums have been paid the deed of sale is void and of no effect, but in case any distinct lot or parcel separately sold is redeemed, leaving a portion of the premises unredeemed, then the deed of sale is inoperative merely as to the portion or portions of the premises which are redeemed and to the portions not redeemed it remains valid and of full effect.  History: Add. 1981, Act 173, Imd. Eff. Dec. 10, 1981.

The borrower may redeem by paying the lender the sum for which the property was sold at foreclosure, plus interest at the same rate as the mortgage. If the foreclosure buyer recorded an affidavit stating how much in taxes and insurance the foreclosure buyer paid, following the foreclosure sale, then the borrower must repay that amount as part of the redemption process.

If a property is over four units or three acres and has not been abandoned, then the time period for redemption is one year from the date of the foreclosure sale. If the property has been abandoned, and if the balance is over two-thirds of the original loan, then the redemption period is one month. If the balance is two-thirds or less of the original loan, use one year. If the property is four units or less and does not exceed three acres in size, then two different redemption time periods apply.

If the mortgage was originated after 1965, and if the amount that remains unpaid on the loan is more than two-thirds of the original debt, then the borrower still has six months to redeem. If the unpaid balance on a mortgage is less than two-thirds of the original debt, then the borrower has only three months to redeem if the property has been abandoned.

Abandonment

For residential property of four units or less, or three acres or less, abandonment shall be presumed in the following circumstances:

Personal Inspection

The lender has made a personal inspection of the premises and the inspection does not reveal anyone who is presently occupying or about to occupy the premises.

Borrower Fails to Respond to Proper Notice

The lender has posted a notice at the time the personal inspection was made, and mailed it by certified mail, return receipt requested, to the borrower's last known address. The notice must state that the lender considers the premises to be abandoned, and that the redemption period in such event will be only 30 days. If the borrower does not respond to these notices within 15 days by mailing to the lender (first class mail) a letter stating the premises are not abandoned, then the premises are considered to be abandoned. Obviously, a borrower who wants to preserve his or her rights should get busy and write the lender to show the premises are not abandoned or else the borrower will lose most of the benefits of the right of redemption.

Deficiency

A lender is restricted to foreclosing against the property as the sole remedy, unless the lender has a separate document that obligates the borrower to pay a sum certain, such as a promissory note, or the borrower has otherwise agreed to pay a sum in a specific amount stated in the mortgage document. In order to recover a deficiency amount, which would be the balance due on the mortgage minus the sum collected at the foreclosure sale (or credited if the lender bids by canceling out some of the borrower's obligation), the lender must file a lawsuit. The borrower can defend by showing the foreclosure sale price was less than the true value of the property at the time and place of the sale. If the sale was for substantially less than the true value, the deficiency sum the lender can recover may be either defeated or reduced by crediting the property's fair value against the unpaid loan balance at the time of the foreclosure.

However, these defenses do not apply if the lender forecloses by court action rather than by foreclosure by advertisement.

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