Mortgage Note Investing in Michigan

Michigan reaches the foreclosure sale fast — foreclosure by advertisement is non-judicial and gets to auction in roughly two to three months. But the sale is not the finish line in Michigan, and that is the whole point of underwriting this state correctly: a post-sale redemption period follows the auction, and during it the borrower can buy the property back.

That redemption clock is the defining feature. The default period is one year after the sale. It drops to six months when more than two-thirds (66-2/3%) of the original debt remains unpaid — which is the typical non-performing-note situation, so plan on six months in most cases. Either way, clean title is delayed six to twelve months beyond the auction date. Underwrite the full hold: you reach the sale quickly, but you do not control marketable title until the redemption period runs, and you may carry taxes and insurance through that window.

One Michigan quirk to model: in a foreclosure by advertisement, the recoverable attorney fee is capped by statute at just $25, $50, or $75 of the sale bid (Mich. Comp. Laws §600.2431(2)) — effectively nothing, so do not add foreclosure legal fees to your payoff. Deficiency judgments are available as possible upside. Michigan uses a tax-deed system with no redemption once the deed issues, so monitor tax status. No license is required to buy Michigan paper.