Chapter: What is the statutory redemption period for a typical mortgage foreclosure in Michigan? (EN)

Chapter: What is the statutory redemption period for a typical mortgage foreclosure in Michigan? (EN)

Understanding Statutory Redemption in Mortgage Foreclosures

The statutory redemption period in Michigan represents a crucial post-foreclosure timeframe during which the mortgagor (borrower) has the legal right to reclaim their foreclosed property by paying the full amount of the foreclosure sale price, plus interest and certain permissible expenses. This period is not a matter of negotiation but is legally defined within Michigan Compiled Laws (MCL). The length of the redemption period is directly tied to specific characteristics of the mortgage and the property itself. Determining this period requires careful examination of the mortgage terms, the circumstances of the foreclosure, and applicable Michigan law.

Factors Influencing the Statutory Redemption Period

Several key factors dictate the length of the statutory redemption period:

1. Mortgage Type and Loan-to-Value (LTV) Ratio:

   • The original mortgage documentation significantly impacts the redemption period. Mortgages drafted before January 1, 1965, have different rules than more recent mortgages. This content focuses on mortgages drafted after January 1, 1965, which are the most common.

   • The LTV ratio at the time of the mortgage influences the redemption timeline in some cases.

2. Property Type:

   • Abandoned Property: If the property is deemed abandoned, the redemption period is significantly shorter. The foreclosing party has the burden of proving abandonment.

   • Agricultural Property: Redemption periods for agricultural properties can vary.

   • Residential Property: This is the most common scenario, and the standard redemption periods apply as detailed below.

3. Deficiency Judgment Waiver:

   • The mortgagee (lender) can waive their right to seek a deficiency judgment against the mortgagor. A deficiency judgment allows the lender to pursue the borrower for the difference between the foreclosure sale price and the outstanding mortgage debt. Waiving this right can impact the redemption period in some scenarios.

Standard Statutory Redemption Periods in Michigan

The most common redemption periods in Michigan are:

1. Six Months:

   • This is the standard redemption period for most residential properties. It applies when the mortgage power of sale includes a provision for the sale of the premises, and the premises consist of a residence and do not exceed 2.5 acres. This is the answer to the central question.

2. One Month:

   • Applies if the property is proven to be abandoned. The requirements for demonstrating abandonment are strict and are outlined in MCL 600.3241a. Abandonment requires demonstrating that ALL of the following conditions exist at the time the notice of foreclosure is published:

     • The mortgagor, tenants, or occupants have surrendered possession.
     • Personal property has been substantially removed.
     • At least 2 of the following conditions exist:
       • Utilities (electricity, gas, water) have been terminated.
       • Windows/doors are broken, missing, or unsecured.
       • Trash, debris, or other unsafe conditions exist.
     • The foreclosing party performs an inspection, documents the conditions, and posts notice of abandonment.

3. 30 Days:

   • Applies under specific circumstances as determined by court ordered judgment.

4. Three Months:

   • Applies if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 66 2/3% but less than 100% of the original indebtedness secured by the mortgage.

5. Twelve Months:

   • Applies if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 33 1/3% but less than 66 2/3% of the original indebtedness secured by the mortgage.

Mathematical Representation

While a direct equation for determining the redemption period doesn’t exist in the strict mathematical sense, the process can be represented algorithmically. Let:

• R = Redemption Period (in months)
• A = Amount Claimed Due
• O = Original Indebtedness
• P = Property Type (Residential, Abandoned, Agricultural, etc.)
• W = Deficiency Waiver (Yes/No)

Then, the determination process can be visualized as a series of conditional statements:

IF P = Abandoned THEN R = 1
ELSE IF  Court Ordered Judgment THEN R = 30 Days
ELSE IF 0.6667 < (A/O) < 1 THEN R = 3
ELSE IF 0.3333 < (A/O) < 0.6667 THEN R = 12
ELSE IF P = Residential THEN R = 6
ELSE  //Other scenarios such as agricultural, consult specific legal advice
// R = Determined by specific circumstances

Redemption Process

To redeem the property, the mortgagor must pay the following to the purchaser at the foreclosure sale (typically the lender):

• The amount bid at the foreclosure sale.

• Interest from the date of the sale. The interest rate is usually specified in the mortgage. Let:

  • I = Interest Rate (annual, expressed as a decimal)
  • S = Sale Price
  • T = Time elapsed since sale (in years)

  Then, the total interest due is calculated as:

  Interest Due = S * I * T

• Any taxes and insurance premiums paid by the purchaser after the sale.

• Other permissible expenses as allowed by law.

Important Considerations

• Legal Advice: Determining the correct redemption period can be complex. Consulting with a qualified Michigan attorney is crucial.
• Deadline: The mortgagor must redeem the property before the expiration of the statutory redemption period. Failure to do so results in the loss of ownership.
• Affidavit of Abandonment: If the lender claims abandonment and a one-month redemption period, the lender must record an affidavit of abandonment. The homeowner should scrutinize this affidavit and consider legal action if the abandonment is not legitimate.