HB-4542, As Passed Senate, December 14, 2011

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4542

A bill to amend 1961 PA 236, entitled

"Revised judicature act of 1961,"

by amending sections 3204, 3205, and 3212 (MCL 600.3204, 600.3205,

and 600.3212), section 3204 as amended by 2011 PA 72, section 3205

as added by 2009 PA 29, and section 3212 as amended by 2004 PA 186,

and by adding section 3278.

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.

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)~~

claimed as a principal residence exempt from tax under section 7cc

of the general property tax act, 1893 PA 206, MCL 211.7cc, 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~~ the mortgagor to ~~notify~~

request, either directly or through a housing counselor, a meeting

with the person designated under section 3205a(1)(c) ~~of a request~~

~~by the mortgagor~~ under section ~~3205b(1)~~ 3205b has not expired.

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) Documents have been requested under section 3205b(2) and

the time for producing the documents has not expired.

(e) ~~(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.

(f) ~~(e)~~ The mortgagor and mortgagee have agreed to modify the

mortgage loan and the mortgagor is not in default under the

modified agreement.

(g) ~~(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 July 5, 2009 and before ~~January 5, 2012.~~December 31, 2012.

(6) Subsection (4) does not apply to a mortgage of property

used for agricultural purposes if the mortgage is subject to

borrower's rights under the federal acts and is subject to the

restructuring of distressed loans or the debt restructuring and

loan servicing provisions of the federal acts, if the applicable

period to apply for a restructuring required under the federal acts

is longer than the period within which a borrower may request a

meeting under section 3205b, and if compliance with the federal

acts will not result in proceedings being commenced under this

chapter within 90 days after a default under the mortgage. As used

in this subsection, "federal acts" means the farm credit act of

1971, Public Law 92-181, as amended, or the consolidated farm and

rural development act, Public Law 87-128, and rules and regulations

promulgated under those acts.

Sec. 3205. (1) For a foreclosure proceeding in which the first

notice under section 3205a is mailed to the borrower on or after

February 1, 2012, a mortgage holder or mortgage servicer shall

designate an individual who is an employee or agent of the mortgage

holder, the mortgage servicer, or another entity that is an agent

of the mortgage holder or mortgage servicer or a specific

department or unit of the mortgage holder, the mortgage servicer,

or an entity that is an agent of the mortgage holder or mortgage

servicer to serve as a contact under sections 3205a to 3205c.

(2) The mortgage holder or mortgage servicer that designates

an individual, department, or unit under subsection (1) shall

authorize the individual or, if the designee is a department or

unit, a representative of the department or unit to facilitate

negotiations and attend meetings with the borrower.

(3) As used in this section and sections 3205a to 3205d:

(a) "Borrower" means the mortgagor.

(b) "Mortgage holder" means the owner of the indebtedness or

of an interest in the indebtedness that is secured by the mortgage.

mortgage.

Sec. 3212. Every notice of foreclosure by advertisement shall

include all of the following:

(a) The names of the mortgagor, the original mortgagee, and

the foreclosing assignee, if any.

(b) The date of the mortgage and the date the mortgage was

recorded.

of the notice.

(d) A description of the mortgaged premises that substantially

conforms with the description contained in the mortgage.

(e) For a mortgage executed on or after January 1, 1965, the

length of the redemption period as determined under section 3240.

(f) A statement that if the property is sold at a foreclosure

sale under this chapter, under section 3278 the borrower will be

held responsible to the person who buys the property at the

mortgage foreclosure sale or to the mortgage holder for damaging

the property during the redemption period.

Sec. 3278. (1) During the period of redemption following a

foreclosure sale of property under this chapter, the mortgagor and

any other person liable on the mortgage is liable to the purchaser

at the sale, or the mortgagee, payee, or other holder of the

obligation secured by the mortgage if the mortgagee, payee, or

other holder takes or has taken title to the property at the sale

either directly or indirectly, for any physical injury to the

property beyond wear and tear resulting from the normal use of the

property if the physical injury is caused by or at the direction of

the mortgagor or other person liable on the mortgage.

(2) In an action for damages under this section, the amount of

damages may be determined by any measure of damages applicable

under law, including, but not limited to, the method provided under

section 5739(2).

(3) An action for damages under this section may be joined

with an action for possession of the premises under chapter 57.

Enacting section 1. Sections 3204(4), 3205, and 3212 of the

revised judicature act of 1961, 1961 PA 236, MCL 600.3204,

600.3205, and 600.3212, as amended by this amendatory act, and

section 3278 of the revised judicature act of 1961, 1961 PA 236, as

added by this amendatory act, apply to foreclosure proceedings in

which the first notice under section 3205a of the revised

judicature act of 1961, 1961 PA 236, MCL 600.3205a, is mailed to

the mortgagor on or after February 1, 2012.

Enacting section 2. This amendatory act does not take effect

unless all of the following bills of the 96th Legislature are