Hard money lenders in Michigan: usury, licensing, foreclosure speed and costs

Michigan in one sentence, from the lender’s chair: michigan’s foreclosure by advertisement reaches a sale in two to three months, but the borrower’s six-month redemption period means a hard money lender typically waits eight to nine months to hold clean title — and must price the 25% criminal usury ceiling into the structure.

Foreclosure process	Non-judicial
Typical time to sale	2 to 3 months from first notice or filing
Post-sale redemption	After the sheriff’s sale, the homeowner generally has six months to redeem by paying the sale price plus interest and allowed costs.
Deficiency judgment	Allowed
Usury	Michigan’s criminal usury limit is 25% per year, and its civil cap of 7% applies only absent an exemption; business-purpose loans and loans secured by real property are exempt from the civil cap, so hard money lenders operate up to the 25% criminal ceiling with contractual freedom on points.
Transfer tax	Michigan’s state real estate transfer tax is $3.75 per $500 (0.75%) plus a county tax of $0.55 per $500 (0.11%), both customarily paid by the seller.
Median home price (approx.)	$250,000 · property tax about 1.38%

Can a lender charge 12% in Michigan? Usury and business-purpose exemptions

Michigan’s criminal usury limit is 25% per year, and its civil cap of 7% applies only absent an exemption; business-purpose loans and loans secured by real property are exempt from the civil cap, so hard money lenders operate up to the 25% criminal ceiling with contractual freedom on points.

Usury statutes are amended and interpreted by courts; this is an orientation, not a legal opinion. Any loan structured near a cap should be reviewed by a lawyer licensed in the state.

Do hard money lenders need a license in Michigan?

Michigan requires a license or registration under the Mortgage Brokers, Lenders, and Servicers Licensing Act for residential mortgage lending to consumers; business-purpose loans to entities are generally exempt, and the Department of Insurance and Financial Services administers the act. Licensing is the first thing to verify — see vetting a lender — because advance-fee scams imitate licensed lenders.

If the deal fails: the Michigan foreclosure path

In Michigan the lender’s path after a default is non-judicial. Most Michigan foreclosures are “by advertisement”: the lender publishes a notice of sale once a week for four consecutive weeks and posts it on the property within 15 days of the first publication; the sheriff then sells the property at public auction. No court is involved unless the homeowner sues. Judicial foreclosure is available but uncommon. Budget 2 to 3 months from the first formal step to the sale — the number that explains much of the state’s hard money pricing.

After the sheriff’s sale, the homeowner generally has six months to redeem by paying the sale price plus interest and allowed costs. The period is twelve months for larger parcels or when less than two-thirds of the original debt is owed, and can be cut to 30 days if the property is abandoned. During redemption the homeowner may remain in the home, subject to inspection rights the purchaser gained in 2014.

A Michigan lender may sue the borrower for the deficiency after a sheriff’s sale. If the lender bought the property at the sale, the borrower may defend by showing the bid was substantially below the property’s true value, which can reduce or eliminate the deficiency. Full homeowner-side detail on our Michigan foreclosure page; the investor-side consequences are in hard money default.

Transfer taxes, property taxes and closing costs in Michigan

Michigan’s state real estate transfer tax is $3.75 per $500 (0.75%) plus a county tax of $0.55 per $500 (0.11%), both customarily paid by the seller. Entry and exit costs are fixed; holding costs run with time. In Michigan, property tax at roughly 1.38% of value (about $3,450 a year on $250,000) is the largest recurring one after interest.

With the transfer taxes on the seller, Michigan buyer closing costs typically total 2% to 3% of the price; property taxes are billed in summer and winter, and Michigan’s taxable-value cap resets on sale, so a new buyer’s tax bill can jump above the seller’s.

Flip and rental markets in Michigan

Detroit and its suburbs (Wayne, Oakland, Macomb) are a nationally known investor market with extreme block-by-block variance, while Grand Rapids, Lansing, Flint and Kalamazoo offer steadier rental demand; land-bank and tax-foreclosure inventory is a Detroit-specific channel.

Treat this as a starting list for research, not a recommendation. Every metro above has neighborhoods where flips lose money.

Frequently asked questions

Is hard money lending legal in Michigan?

Yes. Michigan’s criminal usury limit is 25% per year, and its civil cap of 7% applies only absent an exemption; business-purpose loans and loans secured by real property are exempt from the civil cap, so hard money lenders operate up to the 25% criminal ceiling with contractual freedom on points. Michigan requires a license or registration under the Mortgage Brokers, Lenders, and Servicers Licensing Act for residential mortgage lending to consumers; business-purpose loans to entities are generally exempt, and the Department of Insurance and Financial Services administers the act.

How fast can a hard money lender foreclose in Michigan?

About 2 to 3 months in an ordinary case (non-judicial process), plus any cure or notice periods the loan documents add. After the sheriff’s sale, the homeowner generally has six months to redeem by paying the sale price plus interest and allowed costs.

What does a typical hard money loan cost in Michigan?

There is no Michigan-specific rate — lenders price the borrower, the deal and the state’s recovery speed. Illustratively, $212,500 at 11% with 2 points over nine months runs about $21,782 before fees. See rates, points and LTV.

The playbook

Also for this state: first-time home buyer programs in Michigan · foreclosure in Michigan.

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