Some Michigan homeowners successfully negotiate new mortgage terms and avoid foreclosure. However, others do not and foreclosure is allowed to proceed. After a financial lender starts the foreclosure process, the next step is setting a date for the sheriff’s sale, where another buyer may purchase the home. Even so, this does not mean the original homeowner has no chance to hold on to the property.
As The Nest explains, after a purchaser has successfully made a bid at the sheriff’s sale, there is a span of time called a redemption period which provides the original homeowner a grace period before the new purchaser can take possession of the property. A redemption period allows an original property owner time to get personal finances back into shape and come up with enough money to redeem the mortgage. While not every state has a redemption period, Michigan is one state that does.
According to the Michigan State Housing Development Authority (MSHDA), the typical redemption period lasts for six months. During this time, the original property owner is permitted to live in the property, though the owner retains responsibilities to keep up the home and its utilities. Under state law, the owner can redeem the property by paying the winning bid from the sheriff’s sale in addition to interest and other fees.
Maintaining the property is essential to staying in the home, otherwise the redemption period could be immediately terminated. If a home is in imminent danger of damage or if damage to the property has already occurred, the new purchaser is empowered to end the redemption period and bring eviction proceedings against the current owner. This may also happen if the current owner does not allow the purchaser to inspect the home.
The amount a homeowner had previously paid to a lender prior to foreclosure proceedings can also affect how long the redemption period lasts. If you have already paid a lot on your mortgage, the redemption period may last longer. According to Michigan law, if a property owner has an outstanding debt that is less than two-thirds of the original debt, the period of redemption extends to twelve months. This gives the owner more time to try to redeem the property.