Please Offer Me Input On Redemption Period Issue
if a homeowner in the state of michigan goes thru a "sheriff sale" and the home is "sold.," but there is a 6 month "redemption period" - does that mean that the homeowner remains as the title holder UNTIL the 6 month redemption period is over?
what exactly happens on the date of the sheriff sale, say, when a bank buys back the house --- there is no change in the title or deed or anything, right, until the redemption period is over, correct?
i appreciate any and all input. thank you. - JOHN
Michigan Foreclosure facts.
Judicial Foreclosure
In judicial foreclosure, a court decrees the amount of the borrowers debt and gives him or her a short time to pay. If the borrower fails to pay within that time, then the court will issue a notice of sale.
NonJudicial Foreclosure
The nonjudicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower preauthorizes the sale of property to pay off the balance on a loan in the event of the their default.
In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee.
Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the nonjudicial power of sale foreclosure is carried out as follows:
A notice of sale must be published once a week for four (4) in a newspaper of general circulation in the county where the property is located.
The notice must also be posted on the property at least fifteen (15) days after the first notice of sale is published.
The notice must contain the borrower and lenders name, a description of the property, the terms of the sale and the time, place and date of the sale.
The sale must be made at public auction to the highest bidder.
The trustee or the sheriff of the county, if different, may conduct the sale between the hours of 9:00 am and 4:00 pm on the date specified in the notice of sale.
The sale may be postponed by posting a notice at the time and place where the sale was to originally be held.
If the postponement is for more than one week, it must also be published in the manner as the original notice of sale was given.
See http://www.thecreativeinvestor.com/ViewTopic8222-18-7.html
Redemption
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 staling 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.
1. 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.
2. 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 staling 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.
I hope this will provide a better understanding in Michigan.
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