March 17, 2009, Introduced by Reps. Melton, Simpson, Slavens, Liss and Barnett and referred to the Committee on Banking and Financial Services.


     A bill to amend 2002 PA 660, entitled


"Consumer mortgage protection act,"


by amending section 5 (MCL 445.1635).




     Sec. 5. A mortgage loan with a term of less than 5 years shall


not have a payment schedule with regular periodic payments that


when aggregated do not fully amortize the outstanding principal


balance. This section does not apply to loans with maturities of


less than 1 year, if the purpose of the loan is a "bridge" loan


connected with the acquisition or construction of a dwelling


intended to become the borrower's principal dwelling. In addition


to the other requirements of this act, a high-cost home loan is


subject to the following additional limitations and prohibited




     (a) A creditor shall not directly or indirectly finance any


points or fees in excess of 2% of the loan amount in connection


with a high-cost home loan.


     (b) A creditor shall not include in the loan documents for a


high-cost home loan or charge a borrower in a high-cost home loan


any prepayment fees or penalties.


     (c) A high-cost home loan shall not contain a scheduled


payment that is more than twice as large as the average of earlier


scheduled payments. This subdivision does not apply when the


payment schedule is adjusted to the seasonal or irregular income of


the borrower.


     (d) A high-cost home loan shall not include payment terms


under which the outstanding principal balance or accrued interest


will increase at any time over the course of the loan because the


regularly scheduled periodic payments do not cover the full amount


of interest due.


     (e) A high-cost home loan shall not contain a provision that


increases the interest rate after default. This subdivision does


not apply to interest rate changes in a variable rate loan


otherwise consistent with the provisions of the loan documents, if


the change in the interest rate is not triggered by the event of


default or the acceleration of the indebtedness.


     (f) A high-cost home loan shall not include terms under which


more than 2 periodic payments required under the loan are


consolidated and paid in advance from the loan proceeds provided to


the borrower.


     (g) A creditor shall not make a high-cost home loan without


first receiving certification from a counselor from an independent


nonprofit organization approved by the United States department of


housing and urban development, by a state housing financing agency,


or by the regulatory agency that has jurisdiction over the


creditor, that the borrower has received counseling on the


advisability of the loan transaction. A counselor or counseling


agency that is affiliated with a mortgage broker or mortgage


lender, as those terms are defined in section 1a of the mortgage


brokers, lenders, and servicers licensing act, 1987 PA 173, MCL


445.1651a, is not considered an independent nonprofit organization


for purposes of this subsection.


     (h) A creditor shall not pay a contractor under a home-


improvement contract from the proceeds of a high-cost home loan,


unless the instrument is payable to the borrower or jointly to the


borrower and the contractor or, at the election of the borrower,


through a third-party escrow agent in accordance with terms


established in a written agreement signed by the borrower, the


creditor, and the contractor before the disbursement.


     (i) A creditor shall not charge a borrower a fee or other


amount to modify, renew, extend, or amend a high-cost home loan or


to defer any payment due under the terms of a high-cost home loan.


     (j) A high-cost home loan document that creates a debt or an


interest in property to secure a debt shall include the following


notice, printed conspicuously on the face of the document:


     "Notice: This is a high-cost home loan subject to special


rules under state law. A purchaser or assignee of this high-cost


home loan may be liable for all claims and defenses of the borrower


with respect to the home loan.".


     Enacting section 1. This amendatory act does not take effect


unless all of the following bills of the 95th Legislature are


enacted into law:


     (a) Senate Bill No.____ or House Bill No. 4592(request no.




     (b) Senate Bill No.____ or House Bill No. 4587(request no.




     (c) Senate Bill No.____ or House Bill No. 4586(request no.




     (d) Senate Bill No.____ or House Bill No. 4593(request no.




     (e) Senate Bill No.____ or House Bill No. 4590(request no.




     (f) Senate Bill No.____ or House Bill No. 4589(request no.




     (g) Senate Bill No.____ or House Bill No. 4591(request no.




     (h) Senate Bill No.____ or House Bill No. 4588(request no.