Changes in Michigan’s foreclosure law
Significant changes to Michigan’s “90-day law” and purchaser rights to inspect property to determine if there is damage during redemption period.
Two significant changes to Michigan’s foreclosure law became effective on January 10, 2014. The pre-foreclosure negotiation provision, otherwise known as the “90-day law”, will sunset. Another key provision is now the purchaser, 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 at the sheriff’s sale.
The new law extends the 90-day law to sunset on June 30, 2014. However, the 90-day law requirements will not apply to foreclosures by advertisements after January 9, 2014. If foreclosures were initiated before January 9, 2014, they must comply with the 90-day law until the end of June.
Beginning January 10, 2014, mortgage servicers must comply with the new federal loss mitigation procedures implemented by the Consumer Financial Protection Bureau (CFPB). These servicers must also offer the opportunity to hold a meeting with borrowers to discuss options. For more information on CFPB foreclosure procedures, see my article on this topic titled “New foreclosure avoidance procedures.”
Only the five servicers who were part of the National Mortgage Settlement must comply with the CFPB procedures. The five servicers are Ally/GMAC, Bank of America, CitiMortgage, JP Morgan Chase and Wells Fargo. The new rules do not apply to small servicers and community banks. See my related articles from April 9 and April 26, 2013.
Brand new in the Michigan law is the right for the purchaser at the foreclosure sale to inspect the homeowner’s property, both exterior and interior, and all ancillary structures like sheds and garages throughout the redemption period, which is usually six months. What happens if the homeowner does not consent to the inspection? 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. To learn more about the redemption period, see my articles from May 21, 2012 and June 18, 2013. How this part of the law is implemented remains to be seen.
The Detroit Free Press recently ran an article stating how the legislature hurt Michigan homeowners with this new law.
Many Michigan State University Extension offices have HUD-approved housing counselors who offer the housing counseling requirement. 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.
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