Deed in Lieu of Foreclosure Michigan

Guide to Deed in Lieu of Foreclosure: Michigan

What is a Deed in Lieu of Foreclosure?

There are many options for a person or family facing economic instability and trouble in paying their mortgage.  Apart from selling your property, considering a short sale, filing for bankruptcy, or simply filing for foreclosure, you may decide to file for a deed in lieu of foreclosure in Michigan.  The option is not a “cure all,” but a deed in lieu of foreclosure in Michigan can be less damaging to your credit.  However, if you do decide to go through with the deed in lieu of foreclosure in Michigan, you will lose any equity in the property, and this is not an option if you have any loans or obligations secured by the property.  

The burden of facing foreclosure is extremely complicated and often comes with a great deal of stress.  If you are having trouble paying your mortgage and are thinking about a deed in lieu of foreclosure in Michigan, you should contact a real estate attorney immediately.  Your lawyer will be able to tell you the intricacies of foreclosure law in the state of Michigan, and they may even suggest a different option than the one you are considering.  

General Laws Surrounding a Deed in Lieu of Foreclosure (DIL)

Some laws vary by state to state, but some laws apply on a federal level.  The U.S. Department of Housing and Urban Development (HUD) supplies statutes for federal laws, and some of the laws concerning a DIL fall below:

1) If a mortgager has been approved for a DIL in the state of Michigan or any other state, they only have 90 days to complete the process and title transfer over to the lender from the time they received approval.  If the mortgager fails to complete the process in 90 days, they may face economic disciplinary action from the lender.  

2) Under HUD, a mortgager may be awarded up to $2,000 for junior liens and/or upon vacating the property in the specified time period.  

3) Upon proper consideration, a mortgagee may revert from the foreclosure process to the DIL process in accordance to their Quality Control Plan.  

Important Laws for Deed in Lieu of Foreclosure in Michigan

The state of Michigan has many laws that similarly compare to other states concerning foreclosure and DIL, but the state also has some unique laws as well.  Some of the laws fall below and may affect your ultimate decision to file for a deed in lieu of foreclosure in Michigan or not:

1) The state of Michigan is a recourse state.  This means a lender can seek deficiency judgment for after the sale of your home.  However, Michigan law also requires a lender to specify whether they will seek deficiency judgment or not within the original contract.  If the contract states the lender cannot seek deficiency payments, you are free from any deficiency. 

2) Michigan law also protects your spouse from deficiency judgment if the house is only registered in one spouse’s name. 

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