In the US state of Michigan, lenders are able to make use of both the judicial and non-judicial foreclosure process. This is first and foremost because both primary instruments of security are used to secure the underlying loan. So we find both the Deed of Trust and Mortgage Lien being used. In Michigan a Deed of Trust is referred to as a “Trust Mortgage”.
Essentially Michigan is a title theory state and this means the property remains in trust until such time as the underlying loan has been fully repaid. As this is the case, a power of sale clause is used so that the non-judicial foreclosure process may be used. This clause creates a pre-existing agreement that the property remains in trust until it is paid, and the trustee has the right to foreclose if the property owner defaults on the mortgage repayments.
Typically it takes 60 days to finalize the non-judicial foreclosure process, which is very fast compared to other states, this of course varies if the action is contested of the borrower is applying for a bankruptcy hearing. In the case of a judicial foreclosure being required the process will take longer, and if the court action is contested, it takes even longer to finalize. This only occurs when there is no “power of sale clause” in the legal security instrument. If the sale of the property is postponed for longer than a week it has to be re-advertised for 4 consecutive weeks again
Rights of redemption do apply, the period for redemption varies, and transfer of the property into the new owner’s name only occurs once the redemption period expires. Deficiency Judgments are allowed, however the borrower is able to defend this action by stating that the property was not sold at market value at the auction.