Updates to Michigan’s foreclosure law
Michigan’s foreclosure law allows purchaser the right to inspect property to determine if there is damage during redemption period.
In June 2014, the Michigan legislature and Governor Snyder passed important clarifications to Michigan’s foreclosure law during the redemption period. A previous Michigan State University Extension article described other changes to Michigan’s foreclosure law went into effect on January 10, 2014.
The pre-foreclosure negotiation provision, otherwise known as the “90-day law”, has sunset. However, you do have the right in many circumstances to request a loan modification or other options to avoid foreclosure under federal law. Depending upon where you are in the process, if you submit a complete application your mortgage company may not be able to move forward with foreclosure until they have fully reviewed your information. There are also other foreclosure avoidance procedures you can take under the new procedures from the Consumer Financial Protection Bureau.
Another key Michigan law provision is that now the purchaser at the sheriff’s sale (which is usually the bank) has the right to inspect the homeowner’s entire property during the redemption period to determine if there is damage to the property throughout the redemption period, which is usually six months. They may inspect the outside of your property as many times as they want without any notice.
According to Legal Aid of Western Michigan, in order to inspect the inside, the purchaser must first send you an initial notice that includes:
- The purchaser’s identity
- Contact information for the purchaser
- The date of the sale
- The amount of the sale
- The date the redemption period expires
- Information about the purchaser’s inspection rights under the law
- How to notify the purchaser when you move out of the property
- Mention that you are obligated to notify the purchaser when you move out of the property
After the purchaser sends this first notice, the purchaser may undertake an initial interior inspection by providing an additional notice of the purchaser’s intent to inspect. This additional notice must be made at least 72 hours in advance and shall set the date and time of the inspection, in coordination with you.
After that, the purchaser may request that you provide additional information regarding the property no more than once per month or three times in the six month redemption period. If you fail to provide the requested information or if the information indicates the possibility of damage to the property, then the purchaser may schedule another interior inspection with 72 hours’ notice.
If the inspections indicate that there is “imminent” danger of damage or if the property has, in fact, been damaged, then the purchaser must give you notice of the problems and seven days to repair the damage. If you complete the repairs or if you and the purchaser agree to a different timeline and you abide by the timeline then the purchaser will not seek to evict you and terminate your redemption period. If you do not make the repairs, the purchaser can seek to evict you and terminate the redemption period.
Damage can include “stripping” the pipes or metal from the property, missing or destroyed structural items such as kitchen cabinets, furnaces, walls or roofs.
According to the new law, if the homeowner unreasonably refuses inspection or if damage to the property is imminent or has occurred, the purchaser can immediately begin eviction proceedings to seek possession of the property and eliminate the homeowner’s redemption period.
Many MSU Extension offices have HUD-approved housing counselors who offer free housing counseling. Find one near you at http://www.mimoneyhealth.org/contact_us to call for an appointment in person, by phone or online. In other areas, find a HUD approved housing counselor.