SENATE BILL No. 930

 

 

October 21, 2009, Introduced by Senators WHITMER, ANDERSON, CHERRY, OLSHOVE, BARCIA, CLARKE, BASHAM, SWITALSKI, HUNTER, SCOTT and BRATER and referred to the Committee on Banking and Financial Institutions.

 

 

 

     A bill to create the foreclosure protection act; to regulate

 

certain mortgage foreclosure consultants, foreclosure consulting

 

contracts, equity purchasers, and equity purchase contracts; and to

 

provide penalties and remedies for violations of that act.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"foreclosure protection act".

 

     Sec. 2. (1) As used in this act:

 

     (a) "Associate" means a partner, a subsidiary, an affiliate,

 

an agent, or any other person working in association with a

 

foreclosure consultant or an equity purchaser. Associate does not

 

include a person that is excluded from the definition of an equity

 

purchaser or a foreclosure consultant.

 


     (b) "Equity purchase contract" means an agreement between an

 

equity purchaser and a homeowner concerning the acquisition of

 

title to the homeowner's personal residence.

 

     (c) "Equity purchaser" means a person that acquires title to a

 

residence in foreclosure in the course of the person's business,

 

vocation, or occupation. Equity purchaser does not include a person

 

that acquires that title for the purpose of using the residence as

 

his or her personal residence for at least 1 year or a person that

 

acquires that title in a manner that meets any of the following:

 

     (i) By a deed in lieu of foreclosure to the holder of an

 

evidence of debt or an associate of the holder of an evidence of

 

debt or the holder of a consensual lien or encumbrance of record

 

that is recorded before the foreclosure sale in the register of

 

deeds office of the county where the residence in foreclosure is

 

located.

 

     (ii) By a deed from any trustee, sheriff, or other person

 

appointed by a court as a result of a foreclosure sale.

 

     (iii) At a sale of property authorized by statute.

 

     (iv) By order or judgment of any court.

 

     (v) From the person's spouse or relative, from a relative of

 

the person's spouse, or from a guardian, conservator, or personal

 

representative of any of those individuals.

 

     (vi) While performing services as a part of a person's normal

 

business activities under any law of this state or the United

 

States that regulates financial institutions, an affiliate or

 

subsidiary of any of the financial institutions, or an employee or

 

agent acting on behalf of any of the financial institutions.

 


     (d) "Evidence of debt" means a writing that evidences a

 

promise to pay or a right to the payment of a monetary obligation,

 

including, but not limited to, a promissory note; bond; negotiable

 

instrument; loan, credit, or similar agreement; or monetary

 

judgment entered by a court of competent jurisdiction.

 

     (e) "Financial institutions" means banks, trust companies,

 

savings and loan associations, credit unions, insurance companies,

 

title insurers, insurance producers, or escrow companies authorized

 

to conduct business in this state.

 

     (f) Subject to subsection (2), "foreclosure consultant" means

 

a person that meets both of the following:

 

     (i) Does not, directly or through an associate, take or acquire

 

any interest in or title to a residence in foreclosure.

 

     (ii) In the course of the person's business, vocation, or

 

occupation, makes a solicitation, representation, or offer to a

 

homeowner to perform, in exchange for compensation from the

 

homeowner or from the proceeds of any loan or advance of funds, a

 

service that the person represents will do any of the following:

 

     (A) Stop or postpone a foreclosure sale.

 

     (B) Obtain a forbearance from a beneficiary under a deed of

 

trust, mortgage, or other lien.

 

     (C) Assist the homeowner in exercising a right to cure a

 

default.

 

     (D) Obtain an extension of the period within which the

 

homeowner may cure a default.

 

     (E) Obtain a waiver of an acceleration clause contained in an

 

evidence of debt secured by a deed of trust, mortgage, or other

 


lien on a residence in foreclosure or contained in that deed of

 

trust, mortgage, or other lien.

 

     (F) Assist the homeowner to obtain a loan or an advance of

 

funds.

 

     (G) Avoid or reduce the impairment of the homeowner's credit

 

resulting from the recording of a notice of election and demand for

 

sale, commencement of a judicial foreclosure action, or due to any

 

foreclosure sale or the granting of a deed in lieu of foreclosure

 

or resulting from any late payment or other failure to pay or

 

perform under the evidence of debt, the deed of trust, or other

 

lien securing that evidence of debt.

 

     (H) In any way delay, hinder, or prevent the foreclosure of

 

the homeowner's residence.

 

     (I) Assist the homeowner in obtaining from the beneficiary,

 

mortgagee, or grantee of the lien in foreclosure, or from counsel

 

for that beneficiary, mortgagee, or grantee, the remaining or

 

excess proceeds from the foreclosure sale of the residence in

 

foreclosure.

 

     (g) "Foreclosure consulting contract" means any agreement

 

between a foreclosure consultant and a homeowner.

 

     (h) "Holder of evidence of debt" means the person in actual

 

possession of or otherwise entitled to enforce an evidence of debt,

 

except that holder of evidence of debt does not include a person

 

acting as a nominee solely for the purpose of holding the evidence

 

of debt or deed of trust as an electronic registry without any

 

authority to enforce the evidence of debt or deed of trust. Each of

 

the following persons is presumed to be the holder of evidence of

 


debt:

 

     (i) The person who is the obligee of and who is in possession

 

of an original evidence of debt.

 

     (ii) The person in possession of an original evidence of debt

 

and a proper endorsement or assignment of that evidence of debt to

 

that person.

 

     (iii) The person in possession of a negotiable instrument

 

evidencing a debt that has been duly negotiated to that person or

 

to bearer or indorsed in blank.

 

     (iv) The person in possession of an evidence of debt with

 

authority, which may be granted by the original evidence of debt or

 

deed of trust, to enforce the evidence of debt as an agent, a

 

nominee, or a trustee or in a similar capacity for the obligee of

 

the evidence of debt.

 

     (i) "Homeowner" means the owner of a residence in foreclosure,

 

including a vendee under a land contract.

 

     (j) "Residence in foreclosure" means a residence or dwelling

 

that is occupied as the homeowner's principal place of residence

 

and against which any type of foreclosure action, including, but

 

not limited to, the filing of a notice of default of a deed of

 

trust or the filing of a lawsuit to foreclose a mortgage or other

 

lien, has been commenced.

 

     (2) Foreclosure consultant does not include any of the

 

following:

 

     (a) An individual licensed to practice law in this state while

 

performing any activity related to the individual's attorney-client

 

relationship with a homeowner or any activity related to the

 


individual's attorney-client relationship with the beneficiary,

 

mortgagee, grantee, or holder of any lien being enforced by way of

 

foreclosure.

 

     (b) A holder or servicer of an evidence of debt or the

 

attorney for the holder or servicer of an evidence of debt secured

 

by a deed of trust or other lien on any residence in foreclosure

 

while the person performs services in connection with the evidence

 

of debt, lien, deed of trust, or other lien securing that debt.

 

     (c) A person doing business under any law of this state or the

 

United States that regulates financial institutions, while the

 

person performs services as part of the person's normal business

 

activities, an affiliate or subsidiary of any of the financial

 

institutions, or an employee or agent acting on behalf of any of

 

the financial institutions.

 

     (d) A person originating or closing a loan in a person's

 

normal course of business if either of the following applies to

 

that loan:

 

     (i) The loan is subject to the requirements of the real estate

 

settlement procedures act of 1974, 12 USC 1730f, 1831b, and 2601 to

 

2617.

 

     (ii) With respect to a junior mortgage or home equity line of

 

credit, the loan is subordinate to and closed simultaneously with a

 

qualified first mortgage loan under subparagraph (i) or is initially

 

payable on the face of the note or contract to an entity described

 

in subdivision (c).

 

     (e) A judgment creditor of the homeowner.

 

     (f) A title insurance company or title insurance agent

 


authorized to conduct business in this state while performing title

 

insurance and settlement services.

 

     (g) A person licensed as a real estate broker, associate

 

broker, or real estate salesperson in this state while the person

 

engages in any activity for which the person is licensed.

 

     (h) A nonprofit organization that solely offers counseling or

 

advice to homeowners in foreclosure or loan default, unless the

 

organization is an associate of the foreclosure consultant.

 

     Sec. 3. (1) A foreclosure consulting contract shall be in

 

writing and provided to and retained by the homeowner, with

 

changes, alterations, or modifications, for review at least 24

 

hours before it is signed by the homeowner.

 

     (2) A foreclosure consulting contract shall be printed in at

 

least 12-point type and shall include the name, address, facsimile

 

number, and electronic mail address of the foreclosure consultant

 

to which a notice of cancellation may be delivered and the date the

 

homeowner signed the contract.

 

     (3) A foreclosure consulting contract shall fully disclose the

 

exact nature of the foreclosure consulting services to be provided

 

and the total amount and terms of any compensation to be received

 

by the foreclosure consultant or associate.

 

     (4) A foreclosure consulting contract shall be dated and

 

personally signed, with each page being initialed by each homeowner

 

of the residence in foreclosure and the foreclosure consultant, and

 

shall be acknowledged by a notary public in the presence of the

 

homeowner at the time the contract is signed by the homeowner.

 

     (5) A foreclosure consulting contract shall contain the

 


following notice, printed in at least 14-point, boldfaced type,

 

completed with the name of the foreclosure consultant, and located

 

in immediate proximity to the space reserved for the homeowner's

 

signature:

 

NOTICE REQUIRED BY MICHIGAN LAW

 

 _______________ (NAME OF FORECLOSURE CONSULTANT) OR (HIS/HER/ITS)

 

ASSOCIATE CANNOT ASK YOU TO SIGN OR HAVE YOU SIGN ANY DOCUMENT THAT

 

TRANSFERS ANY INTEREST IN YOUR HOME OR PROPERTY TO (HIM/HER/IT) OR

 

(HIS/HER/ITS) ASSOCIATE.

 

 _______________ (NAME OF FORECLOSURE CONSULTANT) OR (HIS/HER/ITS)

 

ASSOCIATE CANNOT GUARANTEE YOU THAT THEY WILL BE ABLE TO REFINANCE

 

YOUR HOME OR ARRANGE FOR YOU TO KEEP YOUR HOME. YOU MAY, AT ANY

 

TIME, CANCEL THIS CONTRACT, WITHOUT PENALTY OF ANY KIND.

 

IF YOU WANT TO CANCEL THIS CONTRACT, MAIL OR DELIVER A SIGNED AND

 

DATED COPY OF THIS NOTICE OF CANCELLATION, OR ANY OTHER

 

WRITTEN NOTICE, INDICATING YOUR INTENT TO CANCEL TO _______________

 

(NAME OF FORECLOSURE CONSULTANT) AT _______________ (ADDRESS OF

 

FORECLOSURE CONSULTANT, INCLUDING FACSIMILE NUMBER AND ELECTRONIC

 

MAIL ADDRESS).

 

AS PART OF ANY CANCELLATION, YOU (THE HOMEOWNER) MUST REPAY

 

ANY MONEY ACTUALLY SPENT ON YOUR BEHALF BY _______________ (NAME OF

 

FORECLOSURE CONSULTANT) PRIOR TO RECEIPT OF THIS NOTICE AND, AS A

 

RESULT OF THIS AGREEMENT, WITHIN 60 DAYS, ALONG WITH INTEREST AT

 

THE PRIME RATE PUBLISHED BY THE FEDERAL RESERVE BOARD PLUS 2

 

PERCENTAGE POINTS, WITH THE TOTAL INTEREST RATE NOT TO EXCEED 8

 

PERCENT PER YEAR.

 

THIS IS AN IMPORTANT LEGAL CONTRACT AND COULD RESULT IN THE LOSS OF

 


YOUR HOME. CONTACT AN ATTORNEY OR A HOUSING COUNSELOR APPROVED BY

 

THE FEDERAL DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT BEFORE

 

SIGNING.

 

     (6) A completed form in duplicate, captioned NOTICE OF

 

CANCELLATION, shall accompany a foreclosure consulting contract.

 

The notice of cancellation shall meet all of the following:

 

     (a) Be on a separate sheet of paper attached to the contract.

 

     (b) Be easily detachable.

 

     (c) Contain the following statement, printed in at least 14-

 

point type:

 

NOTICE OF CANCELLATION

 

 _______________ (DATE OF CONTRACT)

 

TO: (NAME OF FORECLOSURE CONSULTANT)

 

(ADDRESS OF FORECLOSURE CONSULTANT, INCLUDING FACSIMILE NUMBER AND

 

ELECTRONIC MAIL ADDRESS)

 

I HEREBY CANCEL THIS CONTRACT.

 

 _______________ (DATE)

 

 _______________ (HOMEOWNER'S SIGNATURE)

 

     (7) A foreclosure consultant shall provide to the homeowner a

 

signed, dated, and acknowledged copy of the foreclosure consulting

 

contract and the attached notice of cancellation immediately upon

 

execution of the contract.

 

     (8) The time during which the homeowner may cancel a

 

foreclosure consulting contract does not begin to run until the

 

foreclosure consultant has complied with this section.

 

     Sec. 4. (1) In addition to any right of rescission available

 

under state or federal law, a homeowner has the right to cancel a

 


foreclosure consulting contract at any time. For purposes of this

 

section, cancellation of a foreclosure consulting contract occurs

 

when a homeowner gives written notice of cancellation of the

 

foreclosure consulting contract to the foreclosure consultant at

 

the address specified in the contract or through any facsimile

 

number or electronic mail address identified in the contract or

 

other materials provided to the homeowner by the foreclosure

 

consultant.

 

     (2) If given by mail, notice of cancellation of a foreclosure

 

consulting contract is effective when deposited in the United

 

States mail, properly addressed, with postage prepaid. A notice of

 

cancellation may be in a form other than the form provided for in

 

the contract and is effective, however expressed, if it indicates

 

the intention of the homeowner to cancel the foreclosure consulting

 

contract.

 

     (3) As part of the cancellation of a foreclosure consulting

 

contract, the homeowner shall within 60 days after the date of

 

cancellation repay all funds paid or advanced in good faith before

 

the receipt of notice of cancellation by the foreclosure consultant

 

or his or her associate under the terms of the foreclosure

 

consulting contract, together with interest at the prime rate

 

published by the federal reserve board plus 2 percentage points, or

 

8% per year, whichever is lower, from the date of expenditure until

 

repaid by the homeowner.

 

     (4) Except as provided in subsection (3), the right to cancel

 

a foreclosure consulting contract shall not be conditioned on the

 

repayment of any money.

 


     Sec. 5. A provision in a foreclosure consulting contract is

 

void as against public policy if the provision attempts or purports

 

to do any of the following:

 

     (a) Waive any of the rights specified in sections 3 to 8 or

 

the right to a jury trial.

 

     (b) Consent to jurisdiction for litigation or choice of law in

 

a state other than this state.

 

     (c) Consent to venue in a county other than the county in

 

which the residence in foreclosure is located.

 

     (d) Impose any costs or fees greater than the actual costs and

 

fees.

 

     Sec. 6. A foreclosure consultant shall not do any of the

 

following:

 

     (a) Claim, demand, charge, collect, or receive any

 

compensation until after the foreclosure consultant has fully

 

performed each and every service the foreclosure consulting

 

contracted to perform or represented that the foreclosure

 

consultant would perform.

 

     (b) Claim, demand, charge, collect, or receive any interest or

 

any other compensation for a loan that the foreclosure consultant

 

makes to the homeowner that exceeds the prime rate published by the

 

federal reserve board at the time of any loan plus 2 percentage

 

points, or 8% per year, whichever is lower.

 

     (c) Take a wage assignment, a lien of any type on real or

 

personal property, or any other security to secure the payment of

 

compensation.

 

     (d) Receive any consideration from a third party in connection

 


with foreclosure consulting services provided to a homeowner unless

 

the consideration is first fully disclosed in writing to the

 

homeowner.

 

     (e) Acquire an interest, directly, indirectly, or through an

 

associate, in the real or personal property of a homeowner with

 

whom the foreclosure consultant has contracted.

 

     (f) Obtain a power of attorney from a homeowner for any

 

purpose other than to inspect documents as provided by law.

 

     (g) Induce or attempt to induce a homeowner to enter into a

 

foreclosure consulting contract that does not comply in all

 

respects with sections 3 to 8.

 

     Sec. 7. A foreclosure consultant or associate may not

 

facilitate or engage in any transaction that is unconscionable

 

under the terms and circumstances of the transaction. All of the

 

following apply concerning whether a transaction is unconscionable:

 

     (a) If a court, as a matter of law, finds a foreclosure

 

consulting contract or any clause of a foreclosure consulting

 

contract was unconscionable at the time it was made, the court may

 

refuse to enforce the contract, enforce the remainder of the

 

contract without the unconscionable clause, or limit the

 

application of any unconscionable clause so as to avoid an

 

unconscionable result.

 

     (b) If it is claimed or appears to a court that a foreclosure

 

consulting contract or any clause of a foreclosure consulting

 

contract may be unconscionable, the parties shall be afforded a

 

reasonable opportunity to present evidence as to its commercial

 

setting, purpose, and effect to aid the court in making the

 


determination.

 

     (c) In order to support a finding of unconscionability, there

 

must be evidence of an unreasonable inequality of bargaining power

 

or other circumstances in which there is an absence of meaningful

 

choice for 1 of the parties, together with contract terms that are

 

unreasonably favorable to the foreclosure consultant or associate

 

under standard industry practices.

 

     Sec. 8. A foreclosure consulting contract, and all notices of

 

cancellation provided for in the contract, shall be written in

 

English and shall be accompanied by a written translation from

 

English into any other language principally spoken by the

 

homeowner, certified by the person making the translation as a true

 

and correct translation of the English version. The translated

 

version is presumed to have equal status and credibility as the

 

English version.

 

     Sec. 9. An equity purchase contract shall be written in at

 

least 12-point, boldfaced type and fully completed, signed, and

 

dated by the homeowner and equity purchaser before the execution of

 

any instrument quitclaiming, assigning, transferring, conveying, or

 

encumbering an interest in the residence in foreclosure.

 

     Sec. 10. (1) An equity purchase contract shall contain the

 

entire agreement of the parties and shall include at least all of

 

the following:

 

     (a) The name, business address, telephone number, facsimile

 

number, and electronic mail address of the equity purchaser.

 

     (b) The street address and full legal description of the

 

residence in foreclosure.

 


     (c) Clear and conspicuous disclosure of any financial or legal

 

obligations of the homeowner that will be assumed by the equity

 

purchaser. If the equity purchaser will not be assuming any

 

financial or legal obligations of the homeowner, the equity

 

purchase contract shall so state.

 

     (d) The total consideration to be paid by the equity purchaser

 

in connection with or incident to the acquisition by the equity

 

purchaser of the residence in foreclosure.

 

     (e) The terms of payment or other consideration, including,

 

but not limited to, any services of any nature that the equity

 

purchaser represents will be performed for the homeowner before or

 

after the sale.

 

     (f) The date and time when possession of the residence in

 

foreclosure is to be transferred to the equity purchaser.

 

     (g) The terms of any rental agreement or lease.

 

     (h) The specifications of any option or right to repurchase

 

the residence in foreclosure, including the specific amounts of any

 

escrow deposit, down payment, purchase price, closing costs,

 

commissions, or other fees or costs.

 

     (i) A notice of cancellation as provided in section 12.

 

     (j) The following notice, in at least 14-point, boldfaced

 

type, completed with the name of the equity purchaser, immediately

 

above the statement required by section 12:

 

NOTICE REQUIRED BY MICHIGAN LAW

 

UNTIL YOUR RIGHT TO CANCEL THIS CONTRACT HAS ENDED,

 

____________________(NAME) OR ANYONE WORKING FOR

 

____________________(NAME) CANNOT ASK YOU TO SIGN OR HAVE YOU SIGN

 


ANY DEED OR ANY OTHER DOCUMENT.

 

     (2) An equity purchase contract required under this section

 

survives delivery of any instrument of conveyance of the residence

 

in foreclosure, but does not have any effect on persons other than

 

the parties to the contract or affect title to the residence in

 

foreclosure.

 

     Sec. 11. (1) In addition to any right of rescission available

 

under state or federal law, a homeowner has the right to cancel an

 

equity purchase contract until 12 midnight of the third business

 

day following the day on which the homeowner signs a contract that

 

complies with this act or until 12 noon on the day before the

 

foreclosure sale of the residence in foreclosure, whichever occurs

 

first.

 

     (2) For purposes of this section, cancellation of an equity

 

purchase contract occurs when a homeowner personally delivers

 

written notice of cancellation to the address specified in the

 

equity purchase contract or upon deposit of that notice in the

 

United States mail, properly addressed, with postage prepaid. A

 

notice of cancellation may be in a form other than the form

 

provided for in the contract and is effective, however expressed,

 

if it indicates the intention of the homeowner to cancel the equity

 

purchase contract.

 

     (3) In the absence of any written notice of cancellation from

 

a homeowner, the execution by the homeowner of a deed or other

 

instrument of conveyance of an interest in the residence in

 

foreclosure to the equity purchaser after the expiration of any

 

applicable rescission period creates a rebuttable presumption that

 


the homeowner did not cancel the equity purchase contract.

 

     Sec. 12. (1) An equity purchase contract shall contain, as the

 

last provision before the space reserved for the homeowner's

 

signature, a conspicuous statement in at least 12-point, boldfaced

 

type, that states as follows:

 

YOU MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE WITHOUT ANY

 

PENALTY OR OBLIGATION AT ANY TIME BEFORE _______________ (DATE AND

 

TIME OF DAY). SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN

 

EXPLANATION OF THIS RIGHT.

 

     (2) An equity purchaser shall accurately specify in an equity

 

purchase contract the date and time of day on which the homeowner's

 

cancellation right ends.

 

     (3) An equity purchase contract shall be accompanied by

 

duplicate completed forms, captioned "Notice of Cancellation", in

 

at least 12-point, boldfaced type if the equity purchase contract

 

is printed or in capital letters if the equity purchase contract is

 

typed, followed by a space in which the equity purchaser shall

 

enter the date on which the homeowner executed the equity purchase

 

contract. The form shall meet all of the following:

 

     (a) Be attached to the equity purchase contract.

 

     (b) Be easily detachable.

 

     (c) Contain the following statement, in at least 10-point type

 

if the equity purchase contract is printed or in capital letters if

 

the contract is typed:

 

NOTICE OF CANCELLATION

 

 _______________ (ENTER DATE EQUITY PURCHASE CONTRACT SIGNED). YOU

 

MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE, WITHOUT ANY

 


PENALTY OR OBLIGATION, AT ANY TIME BEFORE _______________ (ENTER

 

DATE AND TIME OF DAY). TO CANCEL THIS TRANSACTION, PERSONALLY

 

DELIVER A SIGNED AND DATED COPY OF THIS NOTICE OF CANCELLATION IN

 

THE UNITED STATES MAIL, POSTAGE PREPAID, TO _______________, (NAME

 

OF PURCHASER) AT _______________ (STREET ADDRESS OF PURCHASER'S

 

PLACE OF BUSINESS) NOT LATER THAN _______________ (ENTER DATE AND

 

TIME OF DAY).

 

I HEREBY CANCEL THIS TRANSACTION _______________ (DATE)

 

_______________ (SELLER'S SIGNATURE).

 

     (4) An equity purchaser shall provide the homeowner with a

 

copy of the equity purchase contract and the attached notice of

 

cancellation.

 

     (5) The time during which the homeowner may cancel an equity

 

purchase contract does not begin to run until the equity purchaser

 

has complied with this section.

 

     Sec. 13. (1) A transaction in which a homeowner purports to

 

grant a residence in foreclosure to an equity purchaser by an

 

instrument that appears to be an absolute conveyance and in which

 

an option to repurchase is reserved to the homeowner or is given by

 

the equity purchaser to the homeowner is permitted only if all of

 

the following conditions have been met:

 

     (a) The reconveyance contract complies in all respects with

 

section 10.

 

     (b) The reconveyance contract provides the homeowner with a

 

nonwaivable, 30-day right to cure any default of the reconveyance

 

contract and specifies that the homeowner may exercise this right

 

to cure on at least 3 separate occasions during the term of the

 


reconveyance contract.

 

     (c) The equity purchaser fully assumes or discharges the lien

 

in foreclosure as well as any prior liens that will not be

 

extinguished by the foreclosure, and the assumption or discharge is

 

accomplished without a violation of the terms and conditions of the

 

liens being assumed or discharged.

 

     (d) The equity purchaser verifies and can demonstrate that the

 

homeowner has or will have a reasonable ability to make the lease

 

payments and to repurchase the residence in foreclosure within the

 

term of the option to repurchase under the reconveyance contract.

 

     (2) For purposes of this section, there is a rebuttable

 

presumption that the homeowner has a reasonable ability to make

 

lease payments and to repurchase the residence in foreclosure if

 

the homeowner's payments for primary housing expenses and regular

 

principal and interest payments on other personal debt do not

 

exceed 60% of the homeowner's monthly gross income; and that the

 

price the homeowner must pay to exercise the option to repurchase

 

the residence in foreclosure is not unconscionable. Without

 

limiting any claim available under section 16, a repurchase price

 

exceeding 25% of the price for which the equity purchaser acquired

 

the residence in foreclosure creates a rebuttable presumption that

 

the reconveyance contract is unconscionable. The acquisition price

 

paid by the equity purchaser may include any actual costs incurred

 

by the equity purchaser in acquiring the residence in foreclosure.

 

     Sec. 14. A provision in an equity purchase contract between an

 

equity purchaser and a homeowner is void as against public policy

 

if it attempts or purports to do any of the following:

 


     (a) Waive any of the rights specified in sections 9 to 17 of

 

this act or the right to a jury trial.

 

     (b) Consent to jurisdiction for litigation or choice of law in

 

a state other than this state.

 

     (c) Consent to venue in a county other than the county in

 

which the residence in foreclosure is located.

 

     (d) Impose any costs or fees greater than the actual costs and

 

fees.

 

     Sec. 15. (1) The equity purchase contract provisions required

 

under sections 9 to 14 shall be provided and completed in

 

conformity with those sections by the equity purchaser.

 

     (2) Until the time within which the homeowner may cancel the

 

transaction has fully elapsed, an equity purchaser shall not do any

 

of the following:

 

     (a) Accept from a homeowner an execution of, or induce a

 

homeowner to execute, an instrument of conveyance of any interest

 

in the residence in foreclosure.

 

     (b) Record with the register of deeds any document, including,

 

but not limited to, the equity purchase contract, or any lease,

 

lien, or instrument of conveyance signed by the homeowner.

 

     (c) Transfer or encumber or purport to transfer or encumber an

 

interest in the residence in foreclosure to a third party.

 

     (d) Pay the homeowner any consideration.

 

     (3) Within 10 days following receipt of a notice of

 

cancellation given under sections 11 and 12, the equity purchaser

 

shall return without condition the original equity purchase

 

contract and any other documents signed by the homeowner.

 


     (4) An equity purchaser shall not make any untrue or

 

misleading statements of material fact regarding the value of the

 

residence in foreclosure, the amount of proceeds the homeowner will

 

receive after a foreclosure sale, any equity purchase contract

 

term, the homeowner's rights or obligations incident to or arising

 

out of the sale transaction, or the nature of any document that the

 

equity purchaser induces the homeowner to sign or any other untrue

 

or misleading statement concerning the sale of the residence in

 

foreclosure to the equity purchaser.

 

     Sec. 16. An equity purchaser or associate may not facilitate

 

or engage in any transaction that is unconscionable under the terms

 

and circumstances of the transaction. All of the following apply

 

concerning whether a transaction is unconscionable:

 

     (a) If a court, as a matter of law, finds an equity purchase

 

contract or any clause of that contract to have been unconscionable

 

at the time it was made, the court may refuse to enforce the equity

 

purchase contract, enforce the remainder of the equity purchase

 

contract without the unconscionable clause, or limit the

 

application of any unconscionable clause so as to avoid an

 

unconscionable result.

 

     (b) If it is claimed or appears to the court that the contract

 

or any clause of the contract may be unconscionable, the parties

 

shall be afforded a reasonable opportunity to present evidence as

 

to its commercial setting, purpose, and effect to aid the court in

 

making the determination.

 

     (c) In order to support a finding of unconscionability, there

 

must be evidence of some bad faith overreaching on the part of the

 


equity purchaser or associate such as that which results from an

 

unreasonable inequality of bargaining power or under other

 

circumstances in which there is an absence of meaningful choice for

 

1 of the parties, together with contract terms that are

 

unreasonably favorable to the equity purchaser or associate under

 

standard industry practices.

 

     Sec. 17. Any equity purchase contract, rental agreement,

 

lease, option or right to repurchase and any notice, conveyance,

 

lien, encumbrance, consent, or other document or instrument signed

 

by a homeowner shall be written in English and shall be accompanied

 

by a written translation from English into any other language

 

principally spoken by the homeowner, certified by the person making

 

the translation as a true and correct translation of the English

 

version. The translated version shall be presumed to have equal

 

status and credibility as the English version.

 

     Sec. 18. (1) Except as provided in subsection (2), the

 

attorney general, a county prosecutor, or a homeowner may bring an

 

action to do 1 or more of the following:

 

     (a) Enjoin a person who is engaged or is about to engage in a

 

method, act, or practice that violates this act.

 

     (b) Obtain a declaratory judgment that a method, act, or

 

practice violates this act.

 

     (c) Recover actual damages consisting of an amount not less

 

than the amount paid by the homeowner to the foreclosure consultant

 

or equity purchaser, plus reasonable attorney fees and court costs.

 

The court may also award the buyer any punitive damages that it

 

considers proper.

 


     (2) A person shall not bring an action under this section more

 

than 4 years after the date of execution of the foreclosure

 

consulting contract or equity purchase contract to which the action

 

relates.

 

     (3) In an action under this act, the burden of proving that a

 

person is not a foreclosure consultant or equity purchaser is on

 

that person.

 

     (4) This section does not limit or prohibit any other legal

 

remedy available to the attorney general, a county prosecutor, or a

 

homeowner.

 

     Sec. 19. A person that violates any provision of this act is

 

guilty of a felony punishable by imprisonment for not more than 1

 

year or a fine of not more than $15,000.00, or both.