A Michigan lender is foreclosing on a residential property through foreclosure by advertisement. The original mortgage was $400,000, and the outstanding balance at the time of the sheriff's sale is $260,000. The property appears to be occupied by the mortgagor. What is the correct statutory redemption period, and what right does the mortgagor have during that period?
Correct Answer
A) 6 months; the mortgagor may remain in possession and redeem by paying the full outstanding balance plus costs
Under MCL 600.3240, the standard redemption period for a residential foreclosure by advertisement is 6 months when the outstanding balance does not exceed two-thirds of the original mortgage amount. Two-thirds of $400,000 = $266,667. The outstanding balance of $260,000 does not exceed $266,667, so the standard 6-month period applies. During the redemption period, the mortgagor has the statutory right to remain in possession of the property and may redeem by paying the full redemption amount (outstanding balance plus costs and interest).
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