By Adil Daudi
As if the foreclosure process was not stressful enough already for homeowners the revised Michigan statute, MCL 600.3240(13), provides mortgage lenders nearly unfettered authority to enter your home and evict you from the premises.
In general, the foreclosure process progresses like this: (1) Foreclosure notices are sent once the borrower is in default of their mortgage; (2) If the borrower is unable to refinance or modify their existing mortgage, then the foreclosure proceedings continue; (3) Mortgage lender will foreclose on the home by judicial foreclosure or foreclosure by advertisement; (4) The property will be sold; (5) After the sale, the borrower will have 6 or 12 months (depending on your specific circumstances) to redeem (refinance, pay the auction bid, etc.) the property or title to the property will vest in the purchaser at the sale; and (6) Assuming the borrower does not redeem during the statutory redemption period and the borrower does not vacate after the statutory redemption period ends, the purchaser will file in the local district court to evict the borrower from the property.
The foreclosure law was amended on July 31, 2013, which became effective on January 10, 2014, and it will significantly, and negatively, impact the borrowerâ€™s ability to redeem their property. Under the new law, following a foreclosure sale and â€œperiodically throughout the redemption period,â€ the mortgage lender â€œmay inspect the exterior and interior of the property and all ancillary structures.â€ If the â€œinspection is unreasonably refusedâ€ or â€œif damage to the property is imminent or has occurred,â€ the mortgage lender may file an eviction proceeding in the local district court or it may â€œfile an action for any other relief necessary to protect the property from damage.â€ This begs the question, â€œwhat constitutes unreasonably and damage?â€
The statute states that damage can be any of the following, however, this is not an exhaustive list of what may constitute as damage:
1. The failure to comply with local ordinances regarding maintenance of the property if the failure is the subject of enforcement action by the appropriate government unit.
2. A boarded up or closed off window or entrance.
3. Multiple broken and unrepaired window panes.
4. A smashed through, broken off, or unhinged door.
5. Accumulated rubbish, trash, or debris.
6. Stripped plumbing, electrical wiring, siding, or other metal material.
7. Missing fixtures, including, but not limited to, a furnace, water heater, or air conditioning unit.
8. Deterioration below, or being in imminent danger of deteriorating below, community standards for public safety and sanitation.
9. A serious and continuing health hazard which the person in possession willfully or negligently causes, discovered within the prior 90 days.
If the mortgage lender proves there is damage to the property, the district court may then award the mortgage lender possession of the property by granting a Judgment for Possession. If a Judgment for Possession is granted, then â€œ[t]he right of redemption is extinguished and full title to the property vests [in the mortgage lender]â€. However, the district court shall not enter such a Judgment for Possession if, before the hearing for possession, the borrower repairs any damage to the property that was the basis for the action.
This law has been effective for only a month. Therefore, the true consequences of the law are unknown at this time. However, based upon a strict reading of the statute, the statute raises more questions than it answers.
First, did you notice that how the damage is done to the property is not contemplated by the statute, nor is the severity of the damage important? Does an act of vandalism by third parties constitute damage under the statute? What if your property is damaged by severe weather, will that be considered damage under the statute? Will one door that is unhinged be considered damage under the statute? The statute does not provide guidance on these issues.
Second, what will be deemed a reasonable refusal to allow the mortgage lender into your home to inspect for damages? Is 24 hoursâ€™ notice before the entry reasonable notice? Is two hoursâ€™ notice before the entry reasonable notice? What if your mortgage lender wants to inspect your home multiple times per week, will that be reasonable? The statute is silent as to what constitutes an unreasonable refusal.
Third, the statute states that if the borrower repairs the alleged damage before the hearing for possession of the property then the court cannot enter a Judgment for Possession. If the borrower repairs the damage literally minutes before the hearing, will that be sufficient to prevent a Judgment for Possession from being entered? What happens if a repairman has been hired, but he has been unable to come out to do the repair before the date of the hearing? What type of documentation will be sufficient to prove to the court that the alleged damage has not been repaired as of the time of the hearing for possession? The statute does not state what mortgage lenders or borrowers must provide as sufficient evidence to support their allegations and defenses.
Based upon the language of the amended law, it is unclear how the law is to be applied. Unfortunately because the law is so new, and it provides little guidance, at least initially there is unlikely to be uniform application of the law. Some borrowers may be given more latitude as to what constitutes as damage or whether a repair was made before the hearing than other borrowers will be afforded. In order to protect your right of redemption hire an experienced attorney to advise you throughout the foreclosure process.
Adil Daudi is an Attorney at JKY Legal Group, P.C., focusing primarily on Asset Protection for Physicians, Physician Contracts, Estate Planning, Shariah Estate Planning, Health Care Law, Business Litigation, and Corporate Formations. He can be contacted for any questions related to this article or other areas of law at email@example.com or (517) 381-2663.