Proposed Changes to Michigan’s Redemption Period

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Michigan lawmakers are considering changes to the state’s foreclosure law which would significantly shorten the period homeowners have to either sell or save their foreclosed property.

Legislation currently under consideration includes a provision that would shorten the foreclosure redemption period from six months to 60 days. The redemption period is the period of time when homeowners can challenge a foreclosure’s legality, sell their home or reclaim the title and possession of property by paying the debt it secured.

Current the six-month redemption window allows people who are unemployed to get a new job and begin making payments again or, if that fails, sell their home on a short sale.

Supporters of the change say that a longer redemption period often leads to abandoned homes and blight.  According to Patricia Herndon, advocacy director for the Michigan Bankers Association, only about 20% to 30% of delinquent borrowers currently use the state’s process to avoid foreclosure.  That means during the redemption period homes are often abandoned and exposed to criminal elements and stripped of fixtures.

Opponents of the bill maintain the changes will be devastating for Michigan homeowners struggling to save their propertyIn the short term, changes to the redemption period  could prevent some Michigan residents from benefiting from a short sale as closing on a short sale typically takes the better part of the 6-month Redemption Period.  While a short sale doesn’t save the home for the homeowner, it does have financial implications for the homeowner . The neighborhood could also be spared another vacant property.

Certainly both sides have merits in their arguments; the difficulty will be striking a balance between preventing blight and giving homeowners every opportunity to redeem their homes.  Stay tuned for details!

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