Protect yourself and your home by understanding the changed redemption law now in effect

The 2013 Changes to the Redemption Period in Michigan after a Foreclosure or Sheriff’s Sale are now in effect.

Michigan Gov. Rick Snyder signed a series of bills in 2013 that made significant changes to a homeowner’s redemption period rights after a foreclosure sale occurs.  Most homeowners have come to rely on the six month redemption period after a foreclosure sale (aka sheriff’s sale).

Although the new Michigan law appears to retain the six month redemption period, the matter is not so sure any longer.  After a residential property is foreclosed the mortgage company may now demand the right to come on site (into your home) and inspect.

If the inspection shows the property is damaged or faces a reasonable risk of damage, then the foreclosure sale purchaser may be able to begin eviction proceedings almost immediately.  This totally flies in the face of Michigan’s historic protection of homeowners.

The new law ignores the fact that in almost every case a homeowner losing their home is not intentionally malicious but rather faces some sort of horrible event (divorce, job loss, devastating disease or even some combination).  The new law is another form of “guilty until proven innocent” that our government seems to apply in every area of life.

Previously under Michigan law almost everyone was entitled to at least a 6-month “redemption period” following a foreclosure sheriff’s sale.  During this time one could continue to reside in their house as they always had.  It was a period of time that Michigan law granted foreclosed homeowners in order that they might be able to obtain financing necessary to “redeem” their home, or at least to set a little money aside in order to move on with some dignity left (“Redeem” means a time to buy back the property from the sheriff’s sale purchaser).

[Also note that although the normal redemption period is 6 months, if your home is on acreage of 3 acres or more, the redemption period is 12 months rather than 6. If your home is empty or abandoned, the redemption period is only 30 days.]

Even worse, up until this new law, foreclosed homeowners had no duty to allow entry to their home of any employee or contractor of the foreclosing party, or of anyone else. The home remained theirs until required to vacate at the end of the redemption period.  The new law is a major reversal of this important protection for homeowners.

Now, effective January 10, 2014, the law has changed.

As of January 2014, purchasers at sheriff’s sale will have the right to inspect not only the exterior of the foreclosed home—but also the interior of the home, and any additional structure on the property.

If the inspection is “unreasonably” refused or if it appears that the property has been damaged or that damage is “imminent,” the purchaser can begin an eviction proceeding immediately, without waiting any time at all.

If this happens, one needs to move quickly because a judgment for possession (the eviction judgment) will not be entered by the court if the homeowner repairs the damage in question.  However, note that such an eviction proceeding can triggered by something as incidental or small as accumulated rubbish or trash.

This opens a serious window for harassment of homeowners.  How much trash can accumulate before the purchaser throws a homeowner and his or her children onto the street? What is meant by “debris”?  Is “refusal” triggered if the homeowner is working two jobs and finds it difficult to meet with the buyer during the daytime?  Is it reasonable for a purchaser to demand entry, when you’re trying to put your kids to bed?

The statutory change guarantees only one thing – homeowners who have suffered a hardship can look forward to high pressure and harassment from the agents hired by foreclosure purchasers.

The bottom line regarding Michigan’s foreclosure redemption period continues to be that you can’t take the redemption period for granted any longer.

Our response is that now more than ever a Michigan homeowner facing foreclosure should come in and visit us for a free consultation to explore your rights as well as options to prevent such action.  Note, however, that a chapter 13 must be filed before the actual foreclosure or sheriff’s sale if one hopes to retain the home.

If you would like to explore your options to save your home (chapter 13) or at least hold off such behavior for some additional period of time (chapter 7) then contact Kerry Hettinger at 269-344-0700 for a free consultation as soon as possible.