HOUSE BILL No. 4046

 

January 22, 2009, Introduced by Rep. Bettie Scott and referred to the Committee on Banking and Financial Services.

 

     A bill to amend 1961 PA 236, entitled

 

"Revised judicature act of 1961,"

 

by amending the title and sections 3115, 3204, and 3236 (MCL

 

600.3115, 600.3204, and 600.3236), the title as amended by 1999 PA

 

239 and section 3204 as amended by 2004 PA 186, and by adding

 

sections 3116, 3117, 3205, 3237, and 3238.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     An act to revise and consolidate the statutes relating to the

 

organization and jurisdiction of the courts of this state; the

 

powers and duties of such courts, and of the judges and other

 

officers thereof; the forms and attributes of civil claims and

 

actions; the time within which civil actions and proceedings may be

 

brought in said courts; pleading, evidence, practice and procedure

 

in civil and criminal actions and proceedings in said courts; to


 

provide remedies and penalties for the violation of certain

 

provisions of this act; to provide for the powers and duties of

 

certain state governmental agencies; to authorize the promulgation

 

of rules; to repeal all acts and parts of acts inconsistent with or

 

contravening any of the provisions of this act; and to repeal acts

 

and parts of acts.

 

     Sec. 3115. Whenever a complaint is filed Subject to sections

 

3116 and 3117, in an action for the foreclosure or satisfaction of

 

any a mortgage on real estate or land contract, the court has power

 

to may order a sale of the premises which that are the subject of

 

the mortgage on real estate or land contract, or of that part of

 

the premises which that is sufficient to discharge the amount due

 

on the mortgage on real estate or land contract plus costs. But the

 

circuit judge The court shall not order that the lands subject to

 

the mortgage be sold within 6 months after the filing of the

 

complaint for foreclosure of the mortgage or that the lands which

 

that are the subject of the land contract be sold within 3 months

 

after the filing of the complaint for foreclosure of the land

 

contract.

 

     Sec. 3116. (1) Subject to subsections (7) and (8), before

 

commencing an action to foreclose a mortgage of residential

 

property under this chapter, the plaintiff shall send a notice in

 

the form adopted under subsection (2) to the mortgagor. The

 

plaintiff shall send a notice under this subsection by certified

 

mail to the mortgagor's last known address no earlier than 60 days

 

after the mortgagor becomes delinquent in the payment of principal

 

or interest under the mortgage or violates any other provision of


 

the mortgage.

 

     (2) The Michigan state housing development authority shall

 

adopt a notice under the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.201 to 24.328, which shall be in plain language

 

and include all of the following:

 

     (a) A statement that the mortgagor is delinquent in making a

 

principal or interest payment or is otherwise in default under the

 

mortgage and, unless the mortgagor has a face-to-face meeting

 

within 30 days after the date of the notice with the person who

 

sent the notice or a consumer credit counseling agency to attempt

 

to resolve the delinquency or default by restructuring the loan

 

payment schedule or otherwise, the person who sent the notice may

 

proceed to foreclose the mortgage.

 

     (b) A place to include the name, telephone number, and address

 

of a local consumer credit counseling agency.

 

     (3) A person shall not commence an action to foreclose a

 

mortgage of residential property under this chapter or take any

 

other action to recover or enforce the indebtedness secured by the

 

mortgage until the later of 33 days after sending a notice to the

 

mortgagor under subsection (1) or, if the mortgagor meets with the

 

mortgagee under subsection (4) or a credit counseling agency under

 

subsection (5), until the expiration of the applicable time period

 

under subsection (4) or (5).

 

     (4) If a mortgagor meets with a mortgagee in accordance with a

 

notice under subsection (1), the mortgagee shall not commence an

 

action to foreclose the mortgage until 30 days after the date the

 

mortgagor first meets with the mortgagee.


 

     (5) If a mortgagor meets with a consumer credit counseling

 

agency in accordance with a notice under subsection (1), the

 

consumer credit counseling agency shall promptly notify all persons

 

that hold mortgages of the mortgagor's real property of the

 

meeting. A person notified under this subsection shall not commence

 

an action to foreclose a mortgage of the property until 30 days

 

after the date that the mortgagor first meets with the consumer

 

credit counseling agency.

 

     (6) Subject to subsections (7) and (8), in an action to

 

foreclose a mortgage of residential property under this chapter

 

that was filed before the effective date of the amendatory act that

 

added this section but in which the property has not been sold

 

under a judgment on the effective date of the amendatory act that

 

added this section, the court shall issue a temporary stay of the

 

action until the later of 33 days after a notice under subsection

 

(1) has been sent to the defendant or, if the defendant meets with

 

the mortgagee or a credit counseling agency under this section,

 

until the expiration of the applicable time period under subsection

 

(4) or (5). The plaintiff in an action that is stayed under this

 

subsection shall send the defendant a notice under subsection (1).

 

     (7) A plaintiff is not required to send a notice under

 

subsection (1) if 1 or more of the following apply:

 

     (a) The mortgagor is more than 24 consecutive or

 

nonconsecutive months in arrears in payments under the mortgage.

 

     (b) The total amount due under the mortgage, not including any

 

accelerated balance but including principal, interest, taxes,

 

assessments, ground rents, hazard insurance, or mortgage insurance


 

or credit insurance premiums, is more than $60,000.00.

 

     (c) The mortgagor has received a notice under subsection (1)

 

from another person who holds a mortgage of the subject property.

 

     (8) A plaintiff is not required to send a second or subsequent

 

notice under subsection (1) if either of the following applies:

 

     (a) The mortgagee has received only partial payment of arrears

 

from the mortgagor under any agreement made under this section

 

after the previous notice.

 

     (b) A notice was sent under subsection (1) while the mortgagor

 

was in bankruptcy, regardless of whether the mortgagor received a

 

discharge, the bankruptcy petition was dismissed, or the mortgagee

 

was given relief from the automatic stay.

 

     Sec. 3117. (1) In an action to foreclose a mortgage of

 

residential property in which a judgment of foreclosure has not

 

been entered by the effective date of the amendatory act that added

 

this section, the court, on motion of a defendant, shall order the

 

action stayed until 1 year after the effective date of the

 

amendatory act that added this section.

 

     (2) In an action to foreclose a mortgage of residential

 

property in which a judgment of foreclosure has been entered but

 

the period of redemption has not expired by the effective date of

 

the amendatory act that added this section, the court, on motion of

 

a defendant, shall do 1 of the following:

 

     (a) If the property has not been sold under the judgment,

 

amend the judgment to include a stay of the sale until 1 year after

 

the effective date of the amendatory act that added this section.

 

     (b) If the property has been sold under the judgment, include


 

in the order confirming the report of sale or, if the order

 

confirming the report of sale has been entered, amend the order to

 

include a provision extending the period of redemption until 1 year

 

after the effective date of the amendatory act that added this

 

section. The register of deeds shall endorse, record, and index an

 

order amending an order confirming the report of sale under this

 

subdivision in the manner provided for deeds of sale under section

 

3130 and note the existence of the order amending the order

 

confirming the report of sale on the record of the deed of sale.

 

     (3) Subject to subsection (4), the court may include in an

 

order entered under subsection (1) or a judgment or order entered

 

under subsection (2) any of the following provisions relating to

 

the property during the stay or extension:

 

     (a) Possession of the property. In making an order under this

 

subdivision, the court shall give preference to the owner in

 

possession.

 

     (b) A fair amount to be paid as rental by the person in

 

possession.

 

     (c) The application of money received from rent under

 

subdivision (b) or any other income or profits of the property. The

 

court may order that payment and distribution of money be made

 

through the clerk of the court or another person.

 

     (d) Preservation of the property, including payment of taxes

 

and maintenance of insurance.

 

     (4) If the parties to an action under this chapter have agreed

 

to restructure the loan payment schedule or made another agreement

 

under section 3116, unless the court determines that there is good


 

cause to order otherwise, the provisions included in an order or

 

judgment under subsection (3) shall not contradict the agreement.

 

     (5) The court may set aside or modify an order or judgment

 

entered under subsection (1) or (2) if a defendant substantially

 

violates a provision ordered under subsection (3) or (4) or for any

 

other reason that the court determines in its discretion to justify

 

the change. If an order or judgment entered under subsection (1) or

 

(2) is set aside, the rights of a person interested in the property

 

that were affected by the order or judgment revest in the person

 

effective the date the order or judgment is set aside as if the

 

order or judgment had not been entered.

 

     (6) This section does not apply if the defendant has failed to

 

meet with the mortgagee or a credit counseling agency as described

 

in section 3116(4) and (5) after receiving a notice under section

 

3116(1).

 

     Sec. 3204. (1) 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.

 

     (e) If the mortgage is of residential property, the party has

 

given notice as required under section 3205 and 33 days have passed

 

since sending the notice or, if the mortgagor has met with the

 

party or a credit counseling agency under section 3205, the

 

applicable time period under section 3205(3) or (4) has expired,

 

whichever is later.

 

     (f) If the mortgage is of residential property, the owner of

 

the mortgaged property or a person liable under the mortgage or

 

mortgage note has not filed an action under subsection (4).

 

     (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) Before 1 year after the effective date of the amendatory

 

act that added this subsection, the owner of mortgaged residential


 

property or a person liable under a mortgage of or mortgage note

 

relating to residential property may file an action in the circuit

 

court for the county where the property is located to enjoin

 

foreclosure of the mortgage by advertisement. The court in an

 

action filed under this subsection shall enjoin foreclosure of the

 

mortgage by advertisement and order the foreclosure to proceed

 

under chapter 31. This subsection does not apply if the owner or

 

person liable has failed to meet with the mortgagee or a credit

 

counseling agency as described in section 3205(3) and (4) after

 

receiving a notice under section 3205(1).

 

     Sec. 3205. (1) Subject to subsections (5) and (6), before

 

taking any action to foreclose a mortgage of residential property

 

by advertisement under this chapter, the person foreclosing the

 

mortgage shall send a notice in the form adopted under section

 

3116(2) to the mortgagor. The person shall send a notice under this

 

subsection by certified mail to the mortgagor's last known address

 

no earlier than 60 days after the mortgagor becomes delinquent in

 

the payment of principal or interest under the mortgage or violates

 

any other provision of the mortgage.

 

     (2) A person shall not take any action to foreclose a mortgage

 

of residential property by advertisement under this chapter or take

 

any other action to recover or enforce the indebtedness secured by

 

the mortgage until the later of 33 days after sending a notice to

 

the mortgagor under subsection (1) or, if the mortgagor meets with

 

the mortgagee or a credit counseling agency under this section,

 

until the expiration of the applicable time period under subsection

 

(3) or (4).


 

     (3) If a mortgagor meets with a mortgagee in accordance with a

 

notice under subsection (1), the mortgagee shall not take any

 

action to foreclose the mortgage until 30 days after the date the

 

mortgagor first meets with the mortgagee.

 

     (4) If a mortgagor meets with a consumer credit counseling

 

agency in accordance with a notice under subsection (1), the

 

consumer credit counseling agency shall promptly notify all persons

 

that hold mortgages of the mortgagor's real property of the

 

meeting. A person notified under this subsection shall not take any

 

action to foreclose a mortgage of the property until 30 days after

 

the date that the mortgagor first meets with the consumer credit

 

counseling agency.

 

     (5) A person is not required to send a notice under subsection

 

(1) if either of the following applies:

 

     (a) The mortgagor is more than 24 consecutive or

 

nonconsecutive months in arrears in payments under the mortgage.

 

     (b) The total amount due under the mortgage, not including any

 

accelerated balance but including principal, interest, taxes,

 

assessments, ground rents, hazard insurance, or mortgage insurance

 

or credit insurance premiums, is more than $60,000.00.

 

     (c) The mortgagor has received a notice under subsection (1)

 

from another person who holds a mortgage of the subject property.

 

     (6) A person is not required to send a second or subsequent

 

notice under subsection (1) if either of the following applies:

 

     (a) The person has received only partial payment of arrears

 

from the mortgagor under any agreement reached under this section

 

with the mortgagor to restructure the payment schedule.


 

     (b) A notice was sent under subsection (1) while the mortgagor

 

was in bankruptcy, regardless of whether the mortgagor received a

 

discharge, the bankruptcy petition was dismissed, or the mortgagee

 

was given relief from the automatic stay.

 

     Sec. 3236. (1) Unless Except as provided in section 3237,

 

unless the premises described in such the deed shall be of sale are

 

redeemed within the time limited for such applicable period of

 

redemption as hereinafter provided , such in this chapter, the deed

 

shall thereupon become becomes operative , on the expiration of the

 

period of redemption and shall vest vests in the grantee therein

 

named , his in the deed or the grantee's heirs or assigns , all the

 

right, title, and interest which the mortgagor had at the time of

 

the execution of the mortgage, or at any time thereafter after the

 

execution, except as to any parcel or parcels which may that have

 

been redeemed and canceled, as hereinafter provided ; and the in

 

this chapter.

 

     (2) After the period of redemption expires, the record thereof

 

shall thereafter, of the deed of sale is for all purposes be deemed

 

a valid record of said the deed of sale without being re-recorded.

 

, but no However, a person having any who has a valid subsisting

 

lien upon on the mortgaged premises, or any part thereof of the

 

mortgaged premises, created before the lien of such the mortgage

 

took effect, shall not be prejudiced by any such the sale, nor

 

shall his and the person's rights or interests be are not in any

 

way affected thereby by the sale.

 

     Sec. 3237. If the applicable period of redemption provided

 

under this chapter for a mortgage of residential property that is


 

being foreclosed by advertisement has not expired before the

 

effective date of the amendatory act that added this section, the

 

person foreclosing the mortgage shall send the mortgagor a notice

 

in the form adopted under section 3116(2) and, if the sale has been

 

conducted, shall send a copy of the notice to the person who

 

purchased the property at the sale. Section 3205(3) to (6) applies

 

after a notice is sent under this section. The person foreclosing

 

the mortgage and any purchaser shall take no further action toward

 

foreclosure until the later of 33 days after the notice has been

 

sent to the mortgagor or, if the mortgagor has met with the

 

mortgagee or a credit counseling agency in accordance with the

 

notice, the expiration of the applicable time period under section

 

3205(3) or (4).

 

     Sec. 3238. (1) If the applicable period of redemption provided

 

under this chapter for a mortgage of residential property that is

 

being foreclosed by advertisement has not expired by 1 year after

 

the effective date of the amendatory act that added this section, a

 

person described in subsection (2) may file a complaint in the

 

circuit court for the county in which the property is located

 

requesting the relief described in subsection (3).

 

     (2) One or more of the following may file an action under this

 

section:

 

     (a) The mortgagor.

 

     (b) The owner of the mortgaged property.

 

     (c) A person who is liable on the mortgage or note.

 

     (3) The court in an action under this section shall enter an

 

order enjoining until 1 year after the effective date of the


 

amendatory act that added this section the issuance of a writ of

 

restitution or other order to give a purchaser under a deed of sale

 

possession of the mortgaged property. Subject to subsection (4),

 

the court may include in the order a provision listed in section

 

3117(3).

 

     (4) If the parties to an action under this section have agreed

 

to restructure the loan payment schedule or made another agreement

 

under section 3205, unless the court determines that there is good

 

cause to order otherwise, the provisions included in an order under

 

subsection (3) shall not contradict the agreement.

 

     (5) The register of deeds shall endorse, record, and index an

 

order under subsection (3) in the manner provided for deeds of sale

 

under section 3232 and note the existence of the order on the

 

record of the deed of sale.

 

     (6) The court may set aside or modify an order entered under

 

subsection (3) if a defendant substantially violates a provision

 

listed in section 3117(3) that is included in the order or for any

 

other reason that the court determines in its discretion to justify

 

the change. If an order entered under subsection (3) is set aside,

 

the rights of a person interested in the property that were

 

affected by the order revest in the person effective the date the

 

order is set aside as if the order had not been entered.

 

     (7) This section does not apply if the defendant has failed to

 

meet with the mortgagee or a credit counseling agency as described

 

in section 3205(3) and (4) after receiving a notice under section

 

3205(1).