Right to argue the sale price was below fair value before paying a deficiency
MCL 600.3280
In plain words
Michigan allows a lender to sue for a deficiency after a foreclosure by advertisement. But if the lender bought the home at the sale, you can raise as a defense that the price was substantially less than the home’s true value.
Who is protected
Michigan borrowers sued for a deficiency after the lender bought the home at the sale.
When it applies
- Only in Michigan.
- Only after the foreclosure sale.
What you can do
Get ready for court
If sued, file an answer and raise the fair-value defense with an appraisal.
Open the tool
Honest limits
- A deficiency is still possible; this defense can reduce it.
- This is general education, not legal advice. Laws change and details depend on your papers and your court; check the current law or ask a lawyer or legal aid.
The law
- State lawDeficiency defense: sale price below true value
MCL 600.3280
What it says: A borrower sued for a deficiency may show the property was worth more than the sale price when the lender bought it.
Read the official texthttps://law.justia.com/codes/michigan/chapter-600/statute-act-236-of-1961/division-236-1961-32/section-600-3280/
Court cases
- Homeowner lostSame topicMartins v. BAC Home Loans Servicing, L.P.
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013)
a mortgage servicer acting for a properly assigned mortgagee may foreclose in Texas without possessing the original note, and an oral promise to modify a large loan is not enforceable
- Homeowner lostSame topicMilton v. U.S. Bank National Ass'n
Milton v. U.S. Bank Nat'l Ass'n, 508 F. App'x 326 (5th Cir. 2013) (per curiam) (unpublished)
an agreement to delay a Texas foreclosure falls within the statute of frauds and must be in writing to be enforced
- Homeowner lostSame topicBFP v. Resolution Trust Corp.
BFP v. Resol. Tr. Corp., 511 U.S. 531 (1994)
the price received at a non-collusive foreclosure sale that complied with state law is reasonably equivalent value under the Bankruptcy Code
Related rights
The right to be heard in court, and to speak for yourself
U.S. Const. amend. XIV, § 1Due Process Clause
Due process means that before the government, through a court, takes your property, you must get a meaningful chance to be heard. In federal court, you have a legal right to present your own case without a lawyer. Most state courts also let people represent themselves, under state rules.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
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A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
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12 U.S.C. § 5220 note(Pub. L. 111-22, div. A, § 702(a)–(b))
If you rent a home that goes through foreclosure, the new owner must give you a notice to move at least 90 days before you have to leave. If you have a real (bona fide) lease signed before the foreclosure notice, you can usually stay until the lease ends. The exception is when the new owner will live in the home; even then you still get the 90 days' notice.
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50 U.S.C. § 3932(b)(1)
If you are in military service and get sued, the court must pause the case for at least 90 days if you ask and show that your duty keeps you from appearing. Before a court can enter a default judgment against you, the other side must file a sworn statement saying whether you are in the military, and the court may appoint a lawyer for you.
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MCL 600.3240(8)
After a Michigan sheriff’s sale you usually still have time to redeem (buy back) the home, and you can generally keep living there. For a home of up to 4 units, the period is 6 months if more than two-thirds of the original loan was still owed; otherwise it is usually 1 year. It can be as short as 30 days if the home is found abandoned.
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