HOUSE BILL No. 4593

 

March 17, 2009, Introduced by Reps. Corriveau, 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,"

 

(MCL 445.1631 to 445.1645) by adding sections 7a and 7b.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 7a. (1) Any person who purchases or is otherwise assigned

 

a high-cost home loan is subject to all affirmative claims and any

 

defenses with respect to the loan that the borrower could assert

 

against the original creditor of the loan. However, this subsection

 

does not apply if the purchaser or assignee demonstrates by a

 

preponderance of the evidence that it meets all of the following:

 

     (a) At the time of the purchase or assignment of the subject

 

loans, has in place policies that expressly prohibit its purchase

 

or acceptance of assignment of any high-cost home loans.


 

     (b) Requires by contract that a seller or assignor of home

 

loans to the purchaser or assignee represents and warrants 1 of the

 

following to the purchaser or assignee:

 

     (i) That the seller or assignor will not sell or assign any

 

high-cost home loans to the purchaser or assignee.

 

     (ii) That the seller or assignor is a beneficiary of a

 

representation and warranty from a previous seller or assignor to

 

that effect.

 

     (c) Exercises reasonable due diligence at the time of purchase

 

or assignment of home loans or within a reasonable period of time

 

after the purchase or assignment of those home loans, intended by

 

the purchaser or assignee to prevent the purchaser or assignee from

 

purchasing or taking assignment of any high-cost home loans.

 

However, for purposes of this subdivision, reasonable due diligence

 

shall provide for sampling and shall not require loan-by-loan

 

review.

 

     (2) Limited to an amount equal to the monthly payments already

 

made under the loan agreement, any finance charges other than those

 

already collected in the monthly payments made under a home loan,

 

forfeiture of future interest on the loan, reasonable costs, and

 

reasonable attorney fees, a borrower acting only in an individual

 

capacity may assert claims that the borrower could assert against

 

the creditor of the home loan against any subsequent holder or

 

assignee of the home loan as follows:

 

     (a) Within 5 years of the closing of a high-cost home loan, a

 

violation of this act in connection with the loan as an original

 

action.


 

     (b) At any time during the term of a high-cost home loan,

 

after an action to collect on the home loan or foreclose on the

 

collateral securing the home loan has been initiated or the debt

 

arising from the home loan has been accelerated or the home loan

 

has become 60 days in default, any defense, claim or counterclaim,

 

or action to enjoin foreclosure or preserve or obtain possession of

 

the home that secures the loan.

 

     (3) The provisions of this section are effective

 

notwithstanding any other provision of law. However, this section

 

shall not be construed to limit the substantive rights, remedies,

 

or procedural rights available to a borrower against any creditor,

 

assignee, or holder under any other law. The rights conferred on

 

borrowers by subsections (1) and (2) are independent of each other

 

and do not limit each other.

 

     Sec. 7b. (1) Subject to subsections (8) and (9), in a civil

 

action, if a person is found by a preponderance of the evidence to

 

have violated this act, the court may award the borrower all of the

 

following:

 

     (a) Actual damages, including consequential and incidental

 

damages. A borrower is not required to demonstrate reliance in

 

order to receive actual damages.

 

     (b) For a violation of section 3 or 4, statutory damages in an

 

amount equal to the monthly payments already made under the loan

 

agreement, any finance charges other than those already collected

 

in the monthly payments made under the loan and forfeiture of

 

future interest on the loan.

 

     (c) If the violation is malicious or reckless, punitive


 

damages.

 

     (d) Costs and reasonable attorney fees.

 

     (2) The attorney general, the prosecuting attorney for the

 

county where an alleged violation occurred, or a borrower may bring

 

an action against a person for injunctive, declaratory, and any

 

other equitable relief to enforce compliance with this act.

 

     (3) The right of rescission granted under the truth in lending

 

act, 15 USC 1601 to 1667f, for a violation of that law is available

 

to a borrower by way of recoupment against a party foreclosing on

 

the home loan or collecting on the loan, at any time during the

 

term of the loan. This subsection does not limit any recoupment

 

right available to a borrower under any other law.

 

     (4) For purposes of this section, a creditor or assignee in a

 

home loan who fails to comply with the provisions of this act while

 

acting in good faith is not in violation of this act if that

 

creditor or assignee establishes either of the following:

 

     (a) Within 60 days of the loan closing, and before receiving

 

any notice of the compliance failure, the creditor or assignee made

 

appropriate restitution to the borrower and appropriate adjustments

 

to the loan.

 

     (b) Within 90 days of the loan closing and before receiving

 

any notice of the compliance failure, and the compliance failure

 

was not intentional and resulted from a bona fide error

 

notwithstanding the maintenance of procedures reasonably adapted to

 

avoid those errors, the borrower is notified of the compliance

 

failure, appropriate restitution is made to the borrower, and

 

appropriate adjustments are made to the loan. As used in this


 

subsection, a "bona fide error" includes, but is not limited to, a

 

computer malfunction or a clerical, calculation, computer

 

programming, or printing error. An error of legal judgment with

 

respect to a person's obligations under this section is not a bona

 

fide error.

 

     (5) The remedies provided in this section are cumulative and

 

are not the exclusive remedies available to a borrower. A borrower

 

is not required to exhaust any administrative remedies provided

 

under this act or any other applicable law before proceeding under

 

this section.

 

     (6) A provision in an agreement for a home loan that allows a

 

person to require a borrower, individually or on behalf of

 

similarly situated borrowers, to assert any legal claim or defense

 

in a forum located outside of this state or limits in any way a

 

claim or defense the borrower may have is void and unenforceable.

 

     (7) A person shall not attempt in bad faith to avoid the

 

application of this act by dividing any home loan transaction into

 

separate parts, structure a home loan transaction as an open-end

 

loan for the purpose of evading this act if the loan would have

 

been a high-cost home loan if the loan had been structured as a

 

closed-end loan, or engage in any other subterfuge with the intent

 

of evading this act.

 

     (8) A borrower may only assert a claim under this act on his

 

or her own behalf and may not assert claims on behalf of similarly

 

situated borrowers.

 

     (9) A borrower who is illegally residing in the United States

 

may not assert a claim under this act.


 

     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.

 

01098'09).

 

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

 

01099'09).

 

     (c) Senate Bill No.____ or House Bill No. 4585(request no.

 

01100'09).

 

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

 

01101'09).

 

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

 

01104'09).

 

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

 

01105'09).

 

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

 

01106'09).

 

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

 

01107'09).