Here are some Quick Facts about foreclosure in Michigan:
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Typically 60 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Varies
In Michigan, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
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.
The non-judicial 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 pre-authorizes 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 non-judicial 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.
The short answer to your question, is Yes. Lenders can seek a deficiency judgment after conducting the foreclosure sale in Michigan. Whether they will or not depends upon numerous factors including what type of loan you have, whether it is more advantageous to forgive the remaining debt (assuming it is not your primary residence).
It is becoming more common for lenders to file suit for deficiencies in Michigan. Chances are now greater than 4-5 years ago that the lender will pursue deficiencies.
A mortgage lender in Michigan has a choice when it comes to foreclosure. Either foreclosure by advertisement, or jduicial foreclosure. The election of remedies doctrine exists in Michigan, so the lender may not use both. If the lender chooses judicial, it may request a deficiency judgment after sale. If the choice is advertisement, the lender may only seek a deficiency if it does not bid at the sale, or bids less than the full balance of the note. This is rare. Most residential lenders in Michigan foreclose by advertisement, and most bid the full balance of the note at the sherrif's sale. In such cases, they may not seek a deficiency. The answer in your case depends on the specific facts, and which remedy, and which choices the lender makes.