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
(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
(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
(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
(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
(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
(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
(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
(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.
(b) Senate Bill No.____ or House Bill No. 4587(request no.
(c) Senate Bill No.____ or House Bill No. 4585(request no.
(d) Senate Bill No.____ or House Bill No. 4586(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.