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Stages of Foreclosure

What Is Foreclosure? 


Foreclosure is a legal process by which a bank, mortgage company or other creditor takes a homeowner's property in order to satisfy a debt. Foreclosures are caused by non-payment of a mortgage (including a first, second or home equity loan) or unpaid real estate taxes. Borrowers who are having difficulty making their payments are encouraged to contact a HUD or MSHDA Housing Counselor or Legal Aid Provider for assistance.


Foreclosure Timeline



Day 1: Mortgage payments are typically due on the first of each month. If the payment is not made on or before the due date, it is considered late.


Day 16: A late fee is assessed and the lender mails a late payment notice to the borrower.


Day 31: The mortgage loan is considered in default. Another late payment notice is mailed to the borrower and the lender may also call to discuss payment arrangements. At this point the delinquency has negatively affected the borrower's credit score. 


Day 61: After the loan is two payments past due the lender sends additional late payment notices and increase their efforts in contacting the borrower.


Day 91: The lender sends a "demand" or "breach" letter notifying the borrower that the terms of the mortgage have been violated. The letter also notifies the borrower of their right to work with the lender's representative/attorney for loan repayment or modification options to avoid foreclosure. The notice describes the timeline in which the borrower must initiate contact and also encourages them to seek assistance from a housing counselor.


Day 181: If all attempts to resolve the mortgage default are unsuccessful, the lenders' attorney records a formal notice of foreclosure at the local courthouse, schedules the date for the Sheriff sale and publishes details of the debt over four consecutive weeks in the newspaper.


Day 212: The Sheriff sale is held at the county courthouse and the house is sold to the highest bidder - which is usually the lender. The officer conducting the sale executes a "Sheriff's deed" which specifies the last date that the borrower can redeem the property.


Day 213+: After the house is sold at the Sheriff sale, the borrower may continue to live in the home during the redemption period. The borrower is not required to make mortgage payments during this time, however they must continue to maintain the home, pay utilities and carry property insurance. Michigan's redemption period is generally 6 months, however borrowers should consult with a legal aid provider to discuss their particular situation.
Related Content
 •  Homeowner Education
 •  Find a Homeownership Counselor in Your Area
 •  Step Forward Michigan Programs
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