Foreclosure Process and Laws in Michigan

If you default on your mortgage payments in Michigan, the servicer (on behalf of the loan owner, called the “lender” in this article) will eventually begin the foreclosure process. The method will most likely be nonjudicial (out of court), although judicial foreclosures are also allowed.

Michigan foreclosure law specifies how nonjudicial procedures work, and both federal and state laws give you rights and protections throughout the foreclosure.

What Are My Foreclosure Rights in Michigan?

Both federal and state laws govern foreclosure procedures in Michigan, and your mortgage documents give you rights during the process.

Your Mortgage Rights in Michigan

If you get a loan to buy a home in Michigan, you'll likely sign two documents: a promissory note and a mortgage.

• Promissory note. The promissory note is the document that contains your promise to repay the loan along with the repayment terms.
• Mortgage. The mortgage is the document that gives the lender a security interest in the property and will probably include a power of sale clause. If you fail to make the payments, the power of sale provision gives the lender the right to sell the home nonjudicially so it can recoup the money it loaned you.

You also get rights under the deed of trust and promissory note. For example, if you're late making your monthly payment, most promissory notes provide a grace period of ten to fifteen days before you'll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.

If you default on payments, most deeds of trust require the lender to send you a breach letter (a preforeclosure notice) before officially starting a foreclosure. This notice tells you that the loan is in default. If you don't cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.

Your Rights Under Federal Foreclosure Laws

In most cases, federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives, called "loss mitigation" options, no later than 36 days after a missed payment and again within 36 days after each following missed payment. (12 C.F.R. § 1024.39 (2025).)

No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available and assign personnel to help you. There are a couple of exceptions to these requirements, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39) (2025).)

Federal law also generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. But in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41 (2025).)

Protections If You're in the Military

If you're in the military, the federal Servicemembers Civil Relief Act provides certain legal protections against foreclosure.

Other Foreclosure Rights for Michigan Homeowners

In addition, Michigan homeowners facing foreclosure get the right to:

• get current on the loan and stop the foreclosure sale
• pay off the loan to prevent a sale
• redeem the property after the sale
• file for bankruptcy, and
• get any excess money after a foreclosure sale.

What Are the Different Types of Foreclosure in Michigan?

If you fail to make your mortgage payments in Michigan, the lender can foreclose on your property through either a judicial or nonjudicial method.

Judicial Foreclosures

A judicial foreclosure begins when the lender files a lawsuit seeking court approval to sell the property. If you fail to respond to the lawsuit with a written answer, the lender automatically wins the case. However, if you contest the lawsuit, the court will examine the evidence and decide the outcome. If the lender prevails, the judge will issue a judgment and order the property to be sold at auction.

Nonjudicial Foreclosures

In a nonjudicial foreclosure, the lender follows out-of-court procedures outlined in Michigan law. After completing these steps, the lender can proceed with selling the property at a foreclosure sale. Nonjudicial foreclosures are typically faster and less expensive than judicial ones, making them the preferred choice for most lenders.

What Are the Steps in the Michigan Foreclosure Process?

Again, most Michigan foreclosures are nonjudicial. Here's how the Michigan foreclosure process works.

Notice of the Foreclosure

To officially begin the foreclosure, the lender publishes a notice of sale in a newspaper for four successive weeks at least once per week. Within 15 days after the first publication, a copy of the notice must be posted in a conspicuous place on the property. (Mich. Comp. Laws § 600.3208 (2025).)

However, Michigan law doesn't require the lender to mail notice of the foreclosure to you.

Foreclosure Sales in Michigan

The sale is an auction, which is open to the public. The lender bids on the property using a "credit bid" rather than bidding cash. With a credit bid, the lender gets a credit up to the amount of the borrower's debt. The highest bidder at the sale becomes the new owner of the property.

If a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds—that is, money over and above what's needed to pay off all the liens on your property—you're entitled to that surplus money.

Eviction After Foreclosure

Generally, the new owner must wait until the redemption period expires to begin eviction proceedings. But the new owner of the property may begin eviction proceedings earlier if:

• you unreasonably refuse to allow the new owner to inspect the home
• you cause damage to the property and don’t repair it, or
• damage to the home is imminent, and you don’t correct the issue. (Mich. Comp. Laws § 600.3238 (2025).)

Sometimes, when a home sells at a foreclosure sale, the sale doesn’t bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a “deficiency balance.” Many states, including Michigan, allow the lender to get a personal judgment, which is called a “deficiency judgment,” for this amount against the borrower.

Under Michigan law, the foreclosing party can get a deficiency judgment following a nonjudicial foreclosure by filing a lawsuit. The borrower can contest the amount of the deficiency if the mortgage holder was the purchaser at the foreclosure sale, and:

• the property value at the time of the sale was equal to the debt or
• the foreclosure sale price was substantially less than the fair market value of the property. (Mich. Comp. Laws § 600.3280 (2025).)

What Are the Options Available for Borrowers During Foreclosure in Michigan?

You might be able to prevent a foreclosure sale by reinstating the loan, redeeming the property before or after the sale, filing for bankruptcy, or working out a loss mitigation option, like a loan modification, short sale, or deed in lieu of foreclosure.

Reinstating the Loan

While Michigan foreclosure law doesn't provide a statutory right to reinstate the loan before the sale, many mortgages, like the uniform Fannie Mae/Freddie Mac mortgage, provide the borrower the right to cure the default after acceleration and reinstate the loan. Check your loan documents to find out if you get a reinstatement right and, if so, the deadline to complete one.

Filing for Bankruptcy

If you're facing a foreclosure, filing for bankruptcy might help. Once you file for bankruptcy, something called an "automatic stay" goes into effect. The stay functions as an injunction prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months and eliminate other debts. But if you're behind in mortgage payments when you file, you won't be able to keep your home. To stay in your house, you must be current on payments and be able to protect your equity with an exemption. However, you won't owe anything after foreclosure because Chapter 7 erases mortgage debt. If you want to save your home and you're behind in payments, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available, speak with a local bankruptcy attorney.

Getting Help from a Michigan Foreclosure Lawyer

Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure or you might have leverage to work out an alternative.

Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.