This case arises out of the sheriff’s sale of property in Southfield, Michigan. The record reflects that in 2008 the Petitioners obtained a $227,360 loan secured by a mortgage against the Southfield property. Subsequently, in 2013, they filed for Chapter 7 bankruptcy protection; the bankruptcy discharge extinguished their financial obligations under the promissory note, but did not extinguish Bank of America’s security interest, i.e., mortgage on the Southfield property. In 2017, Bank of America initiated a foreclosure by advertisement on the property.
There appears to be some dispute as to the outstanding balance on the mortgage: Petitioners contend that the balance was $184,413.26, whereas Bank of America asserts that it was $185,002.71, exclusive of foreclosure costs and legal fees. Regardless, at the sheriff’s sale, Bank of America made a partial credit bid of either $100,000 or $102,750, but a third-party purchaser bid and paid $141,750 for the property.
Thereafter, the Petitioners filed a claim for overbid proceeds with the Oakland County Sheriff’s Department, contending that there was a surplus as a result of the sale. In September 2017, the Petitioners filed a complaint in circuit court seeking the alleged surplus money from the sheriff’s sale. In October 2017, the Petitioners filed a motion to compel the release of the surplus money. In doing so, they argued that because their financial obligation under the promissory note secured by the mortgage on the property was discharged in bankruptcy, the difference between Bank of America’s partial credit bid and the final bid on the property constituted surplus money under MCL 600.3252 to which they, not Bank of America, were entitled to receive.
In response, Bank of America argued that the mortgage was not satisfied by its partial credit bid, so MCL 600.3252 was inapplicable. Additionally, Bank of America pointed out that because the amount owed was $185,002.71 and the property only sold for $141,750, there was a deficiency, not a surplus. The trial court agreed with Bank of America, denied the Petitioners’ motion, and dismissed the complaint.
The statute only applies to any surplus money after satisfying the mortgage on which the real estate was sold. Therefore, for the Petitioners to be entitled to anything under MCL 600.3252, the mortgage on the Southfield property must have been satisfied and there must be surplus money remaining after the mortgage is satisfied. Neither requirement is met in this case.
Here, the amount due and owing on the mortgage was either $184,413.26 or $185,002.71. Therefore, in order to meet the financial obligation under the mortgage, the property had to sell for either $184,413.26 or $185,002.71. It was only sold, however, for $141,750. As a result, the mortgage was not satisfied by the sheriff’s sale.
Whether you are trying to save your home from foreclosure, or your home loan is upside down and you are unsure of what you should do, you can find the sound advice and helpful support you require at Aldrich Legal Services in Plymouth, Michigan. We have helped many people find solutions to the real estate issues that you now face. Contact us today to schedule a free consultation and learn more about options that may be available to you.