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What Michigan statute states that junior lien holders have a right of redemption after...

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wmublows | eNotes Newbie

Posted May 19, 2012 at 3:05 AM via web

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What Michigan statute states that junior lien holders have a right of redemption after a sheriff's sale?

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Stephen Holliday | College Teacher | (Level 3) Senior Educator

Posted May 19, 2012 at 5:23 PM (Answer #1)

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There is no statute in Michigan's foreclosure laws that allows junior lienholders any redemption rights after a Sheriff's Sale has been conducted.

Among other rights, the homeowner whose ownership is foreclosed has the absolute right in Michigan to live in the house--without paying rent or mortgage payments--for the full six-month redemption period.  In 2009, there were other rights given to a homeowner under threat of foreclosure, such as the right to a modification if the homeowner has the financial capability to meet new obligations imposed by the modification.

In most, if not all, states, junior lienholders have a right to redeem the property at the Sheriff's Sale--that is the only way available to them to protect their lien in a foreclosed property.  If a junior lienholder chooses not to protect its lien at the Sheriff's Sale, it then becomes an unsecured lender--in other words, it no longer has any interest in the real property.

A junior lienholder who loses a lien, however, still has an outstanding debt owed to it and can seek repayment of that debt just as any other unsecured (for example, a credit-card compmany) creditor might, so the debt still exists, it just is no longer secured by a second mortgage on the real estate.

 

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