A lender in Michigan wants to foreclose on a defaulted mortgage but the mortgage document does not contain a power-of-sale clause. Which foreclosure method must the lender use?
Correct Answer
D) Judicial foreclosure, because a power-of-sale clause is required for foreclosure by advertisement
Under MCL 600.3201, foreclosure by advertisement (non-judicial foreclosure) is only available when the mortgage contains a power-of-sale clause. Without such a clause, the lender must pursue judicial foreclosure by filing a lawsuit in circuit court. Michigan permits both methods, but the availability of non-judicial foreclosure depends on the mortgage document containing the requisite power-of-sale language.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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