Michigan homeowners facing foreclosure could soon get added protection from buyers who pressure them to sign away property rights before a sheriff’s sale.
The Michigan House passed House Bills 5152 and 5153 this week, according to Michigan House Democrats.
The bills target a practice in which buyers contact homeowners after a foreclosure notice has been recorded but before the foreclosure sale takes place.
For homeowners, that period can be financially dangerous. They may still own the property and still have rights, but a rushed deed, assignment, or rescue agreement can cost them equity they may not realize they still have.
The Bills Target Quitclaim Deed Pressure
Supporters say some companies persuade homeowners in foreclosure to sign quitclaim deeds for far less than the property is worth.
Rep. Joey Andrews said the practice has been especially aggressive in Berrien County and can affect seniors and economically vulnerable families. He said some homeowners sign away redemption rights or even the home itself without understanding that other options may still be available.
Homeowners May Still Have Rights After Sale
Michigan’s foreclosure process includes a redemption period after a sheriff’s sale in many cases.
The Michigan State Housing Development Authority says six months is the most common redemption period, though some properties have different timelines. During that period, the homeowner may still live in the home and may be able to redeem the property by paying the required amount.
Surplus Proceeds Can Also Be at Stake
If a foreclosed home sells for more than the amount owed, the remaining money may become surplus proceeds.
The bill package is designed to limit transactions that strip homeowners of redemption rights and surplus proceeds for a fraction of their value. It would require clearer written disclosures about a homeowner’s rights and estimated equity, create a seven-day cooling-off period before certain transactions, and restrict transfers of redemption rights and surplus proceeds after a foreclosure notice is recorded.
The Bills Are Not Final Law Yet
House Bill 5152 passed the Michigan House on July 1 and was referred to the Senate Housing and Human Services Committee, according to legislative tracking records.
Homeowners who receive foreclosure notices or unsolicited offers should be cautious before signing any deed, assignment, or rescue contract. The Michigan Attorney General warns that foreclosure rescue scams can strip equity from homeowners and leave them worse off, making independent legal or housing-counseling help important before any rights are transferred.