Homeowners do have rights after a foreclosure sale

Homeowners can stay in their homes after the sheriff sale, usually six months.

Foreclosure rates in Michigan have slightly decreased over the past few months. However, many homeowners are still struggling in our economy. The Michigan legislature recently passed new laws about foreclosure which took effect February 1, 2012 and are set to expire December 31, 2012. One of the changes in the new law is a reduced redemption period; that law provided that homeowners of non-agricultural properties with more than three acres had one year to vacate the property. The new law states that these particular homeowners now only have six months to take action.

Homeowners do have rights during foreclosure. Once a property is sold at a sheriff’s sale (foreclosure sale), the redemption period begins. Different types of properties have different redemption periods; a property where more than two-thirds of the loan has been paid, or agricultural property, has a redemption period of one year. If the property has been declared abandoned, the redemption period can be shortened to one month.

During the redemption period, the homeowner(s) can continue to live in the property and are not required to make any mortgage payments. They also have the right to sell the property to another person or buy back the property and keep it.

At the sheriff’s sale, the purchaser paid a certain amount of money to purchase the property. Often the purchaser will be the homeowner’s mortgage company although it could also be another third party. The amount necessary for the homeowner to buy back, or redeem, the property is the amount the purchaser paid, plus some allowable costs and a daily interest rate based upon your mortgage loan interest rate. A homeowner can learn the sale price for the property by obtaining a copy of the sheriff’s deed from the register of deeds in the county where the property is located.

It is possible that the sheriff’s sale purchaser, even if it was the mortgage company, paid less than the amount due on the loan. If the homeowner(s) want to redeem the property they do not have to pay the whole loan amount. They only have to pay the purchase price from the sheriff’s sale, even if it is substantially less than the loan amount.

Going through foreclosure is the right option for some Michigan homeowners. Knowing that they can continue living in their house with no mortgage payments for six months after the sheriff’s sale can keep a roof over their heads and provide time to plan next steps.

For more information about foreclosure in Michigan, go to the “housing and home maintenance” section of the MI Money Health website or Michigan State Housing Development Authority (MSHDA) website. Michigan State University (MSU) Extension offers housing education programs in Ionia, Lapeer, Macomb and Washtenaw Counties with certified housing and foreclosure counselors.

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