September 23, 2010, Introduced by Senators RICHARDVILLE, HUNTER, SANBORN and PAPPAGEORGE and referred to the Committee on Banking and Financial Institutions.
A bill to amend 1961 PA 236, entitled
"Revised judicature act of 1961,"
by amending sections 3204, 3205a, 3205b, and 3205d (MCL 600.3204,
600.3205a, 600.3205b, and 600.3205d), section 3204 as amended by
2009 PA 29, sections 3205a and 3205b as added by 2009 PA 30, and
section 3205d as added by 2009 PA 31; and to repeal acts and parts
of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3204. (1) Subject to subsection (4), a party may
foreclose a mortgage by advertisement if all of the following
circumstances exist:
(a) A default in a condition of the mortgage has occurred, by
which the power to sell became operative.
(b) An action or proceeding has not been instituted, at law,
to recover the debt secured by the mortgage or any part of the
mortgage; or, if an action or proceeding has been instituted, the
action or proceeding has been discontinued; or an execution on a
judgment rendered in an action or proceeding has been returned
unsatisfied, in whole or in part.
(c) The mortgage containing the power of sale has been
properly recorded.
(d) The party foreclosing the mortgage is either the owner of
the indebtedness or of an interest in the indebtedness secured by
the mortgage or the servicing agent of the mortgage.
(2) If a mortgage is given to secure the payment of money by
installments, each of the installments mentioned in the mortgage
after the first shall be treated as a separate and independent
mortgage. The mortgage for each of the installments may be
foreclosed in the same manner and with the same effect as if a
separate mortgage were given for each subsequent installment. A
redemption of a sale by the mortgagor has the same effect as if the
sale for the installment had been made upon an independent prior
mortgage.
(3) If the party foreclosing a mortgage by advertisement is
not the original mortgagee, a record chain of title shall exist
prior to the date of sale under section 3216 evidencing the
assignment of the mortgage to the party foreclosing the mortgage.
(4) A party shall not commence proceedings under this chapter
to foreclose a mortgage of property described in section 3205a(1)
if 1 or more of the following apply:
(a) Notice has not been mailed to the mortgagor as required by
section 3205a.
(b) After a notice is mailed to the mortgagor under section
3205a, the time for a housing counselor to notify the person
designated under section 3205a(1)(c) of a request by the mortgagor
under section 3205b(1) has not expired.
(c) Within 14 days after a notice is mailed to the mortgagor
under section 3205a, the mortgagor has requested a meeting under
section 3205b with the person designated under section 3205a(1)(c)
and 90 days have not passed after the notice was mailed. This
subdivision does not apply if the mortgagor has failed to provide
documents as required under section 3205b(2).
(d) The mortgagor has requested a meeting under section 3205b
with the person designated under section 3205a(1)(c), the mortgagor
has
provided documents if requested as
required under section
3205b(2), and the person designated under section 3205a(1)(c) has
not met or negotiated with the mortgagor under this chapter.
(e) The mortgagor and mortgagee have agreed to modify the
mortgage loan and the mortgagor is not in default under the
modified agreement.
(f) Calculations under section 3205c(1) show that the
mortgagor is eligible for a loan modification and foreclosure under
this chapter is not allowed under section 3205c(7).
(5) Subsection (4) applies only to proceedings under this
chapter in which the first notice under section 3208 is published
after
the effective date of the amendatory act that added this
subsection
and before 2 years after the effective date of the
amendatory
act that added this subsection July 5, 2009.
Sec. 3205a. (1) Subject to subsection (6), before proceeding
with a sale under this chapter of property claimed as a principal
residence exempt from tax under section 7cc of the general property
tax act, 1893 PA 206, MCL 211.7cc, the foreclosing party shall
serve a written notice on the borrower that contains all of the
following information:
(a) The reasons that the mortgage loan is in default and the
amount that is due and owing under the mortgage loan.
(b) The names, addresses, and telephone numbers of the
mortgage holder, the mortgage servicer, or any agent designated by
the mortgage holder or mortgage servicer.
(c) A designation of 1 of the persons named in subdivision (b)
as the person to contact and that has the authority to make
agreements under sections 3205b and 3205c.
(d) That enclosed with the notice is a list of housing
counselors prepared by the Michigan state housing development
authority and that within 14 days after the notice is sent, the
borrower may request a meeting with the person designated under
subdivision (c) to attempt to work out a modification of the
mortgage loan to avoid foreclosure and that the borrower may also
request a housing counselor from the enclosed list to attend the
meeting.
(e) That if the borrower requests a meeting with the person
designated under subdivision (c), foreclosure proceedings will not
be commenced until 90 days after the date the notice is mailed to
the borrower.
(f) That if the borrower and the person designated under
subdivision (c) reach an agreement to modify the mortgage loan, the
mortgage will not be foreclosed if the borrower abides by the terms
of the agreement.
(g) That if the borrower and the person designated under
subdivision (c) do not agree to modify the mortgage loan but it is
determined that the borrower meets criteria for a modification
under section 3205c(1) and foreclosure under this chapter is not
allowed under section 3205c(7), the foreclosure of the mortgage
will proceed before a judge instead of by advertisement.
(h) That the borrower has the right to contact an attorney,
and the telephone numbers of the state bar of Michigan's lawyer
referral service and of a local legal aid office serving the area
in which the property is situated.
(2) A person who serves a notice under subsection (1) shall
enclose with the notice a list prepared by the Michigan state
housing development authority under section 3205d of the names,
addresses, and telephone numbers of housing counselors approved by
the United States department of housing and urban development or
the Michigan state housing development authority.
(3) A person shall serve a notice under subsection (1) by
mailing the notice by regular first-class mail and by certified
mail, return receipt requested, with delivery restricted to the
borrower, both sent to the borrower's last known address.
(4) Within 7 days after mailing a notice under subsection (3),
the person who mails the notice shall publish a notice informing
the borrower of the borrower's rights under this section. The
person shall publish the information 1 time in the same manner as
is required for publishing a notice of foreclosure sale under
section 3208. The notice under this subsection shall contain all of
the following information:
(a) The borrower's name and the property address.
(b) A statement that informs the borrower of all of the
following:
(i) That the borrower has the right to request a meeting with
the mortgage holder or mortgage servicer.
(ii) The name of the person designated under subsection (1)(c)
as the person to contact and that has the authority to make
agreements under sections 3205b and 3205c.
(iii) That the borrower may contact a housing counselor by
visiting the Michigan state housing development authority's website
or by calling the Michigan state housing development authority.
(iv) The website address and telephone number of the Michigan
state housing development authority.
(v) That if the borrower requests a meeting with the person
designated under subsection (1)(c), foreclosure proceedings will
not be commenced until 90 days after the date notice is mailed to
the borrower.
(vi) That if the borrower and the person designated under
subsection (1)(c) reach an agreement to modify the mortgage loan,
the mortgage will not be foreclosed if the borrower abides by the
terms of the agreement.
(vii) That the borrower has the right to contact an attorney,
and the telephone number of the state bar of Michigan's lawyer
referral service.
(5) A borrower on whom notice is required to be served under
this section who is not served and against whom foreclosure
proceedings are commenced under this chapter may bring an action in
the circuit court for the county in which the mortgaged property is
situated to enjoin the foreclosure.
(6) If the borrower and the person designated under subsection
(1)(c) have previously agreed to modify the mortgage loan under
section 3205b, this section and sections 3205b and 3205c do not
apply unless the borrower has complied with the terms of the
mortgage loan, as modified, for 1 year after the date of the
modification.
Sec. 3205b. (1) A borrower who wishes to participate in
negotiations to attempt to work out a modification of a mortgage
loan shall contact a housing counselor from the list provided under
section 3205a within 14 days after the list is mailed to the
borrower. Within 10 days after being contacted by a borrower, a
housing counselor shall inform the person designated under section
3205a(1)(c) in writing of the borrower's request.
(2) After being informed of a borrower's request to meet under
this section, the person designated under section 3205a(1)(c) may
request the borrower to provide any documents that are necessary to
determine whether the borrower is eligible for a modification under
section 3205c. The borrower shall give the person designated under
section 3205a(1)(c) copies of any documents requested under this
section within 10 business days after the request for the
documents. If the borrower does not provide the documents requested
as required by this subsection, a party entitled to foreclose the
mortgage may proceed with the foreclosure.
(3) A housing counselor from the list provided under section
3205a contacted by a borrower under this section shall schedule a
meeting between the borrower and the person designated under
section 3205a(1)(c) to attempt to work out a modification of the
mortgage
loan. At the request of the borrower, the a housing
counselor from the list provided under section 3205a will attend
the meeting. The meeting and any later meetings shall be held at a
time and place that is convenient to all parties, or in the county
where the property is situated.
Sec. 3205d. (1) The Michigan state housing development
authority
shall develop the a list of housing counselors approved
by the United States department of housing and urban development or
by the Michigan state housing development authority who may perform
the duties of housing counselor under sections 3205a to 3205c.
(2) A person who is not on the list of housing counselors
developed under this section shall not perform the duties of
housing counselor under sections 3205a to 3205c.
(3) A person who is not on the list of housing counselors
developed under this section shall not represent that the person is
entitled to perform the duties of housing counselor under sections
3205a to 3205c.
(4) A person who violates subsection (2) or (3) is guilty of a
misdemeanor punishable by imprisonment for not more than 90 days or
a fine of not more than $500.00, or both.
Enacting section 1. Section 3205e of the revised judicature
act of 1961, 1961 PA 236, MCL 600.3205e, is repealed.