SENATE BILL No. 1510

 

 

September 23, 2010, Introduced by Senators RICHARDVILLE, HUNTER, SANBORN and PAPPAGEORGE and referred to the Committee on Banking and Financial Institutions.

 

 

 

     A bill to amend 1961 PA 236, entitled

 

"Revised judicature act of 1961,"

 

by amending sections 3204, 3205a, 3205b, and 3205d (MCL 600.3204,

 

600.3205a, 600.3205b, and 600.3205d), section 3204 as amended by

 

2009 PA 29, sections 3205a and 3205b as added by 2009 PA 30, and

 

section 3205d as added by 2009 PA 31; and to repeal acts and parts

 

of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3204. (1) Subject to subsection (4), 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.

 

     (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) A party shall not commence proceedings under this chapter

 

to foreclose a mortgage of property described in section 3205a(1)

 

if 1 or more of the following apply:

 


     (a) Notice has not been mailed to the mortgagor as required by

 

section 3205a.

 

     (b) After a notice is mailed to the mortgagor under section

 

3205a, the time for a housing counselor to notify the person

 

designated under section 3205a(1)(c) of a request by the mortgagor

 

under section 3205b(1) has not expired.

 

     (c) Within 14 days after a notice is mailed to the mortgagor

 

under section 3205a, the mortgagor has requested a meeting under

 

section 3205b with the person designated under section 3205a(1)(c)

 

and 90 days have not passed after the notice was mailed. This

 

subdivision does not apply if the mortgagor has failed to provide

 

documents as required under section 3205b(2).

 

     (d) The mortgagor has requested a meeting under section 3205b

 

with the person designated under section 3205a(1)(c), the mortgagor

 

has provided documents if requested as required under section

 

3205b(2), and the person designated under section 3205a(1)(c) has

 

not met or negotiated with the mortgagor under this chapter.

 

     (e) The mortgagor and mortgagee have agreed to modify the

 

mortgage loan and the mortgagor is not in default under the

 

modified agreement.

 

     (f) Calculations under section 3205c(1) show that the

 

mortgagor is eligible for a loan modification and foreclosure under

 

this chapter is not allowed under section 3205c(7).

 

     (5) Subsection (4) applies only to proceedings under this

 

chapter in which the first notice under section 3208 is published

 

after the effective date of the amendatory act that added this

 

subsection and before 2 years after the effective date of the

 


amendatory act that added this subsection July 5, 2009.

 

     Sec. 3205a. (1) Subject to subsection (6), before proceeding

 

with a sale under this chapter of property claimed as a principal

 

residence exempt from tax under section 7cc of the general property

 

tax act, 1893 PA 206, MCL 211.7cc, the foreclosing party shall

 

serve a written notice on the borrower that contains all of the

 

following information:

 

     (a) The reasons that the mortgage loan is in default and the

 

amount that is due and owing under the mortgage loan.

 

     (b) The names, addresses, and telephone numbers of the

 

mortgage holder, the mortgage servicer, or any agent designated by

 

the mortgage holder or mortgage servicer.

 

     (c) A designation of 1 of the persons named in subdivision (b)

 

as the person to contact and that has the authority to make

 

agreements under sections 3205b and 3205c.

 

     (d) That enclosed with the notice is a list of housing

 

counselors prepared by the Michigan state housing development

 

authority and that within 14 days after the notice is sent, the

 

borrower may request a meeting with the person designated under

 

subdivision (c) to attempt to work out a modification of the

 

mortgage loan to avoid foreclosure and that the borrower may also

 

request a housing counselor from the enclosed list to attend the

 

meeting.

 

     (e) That if the borrower requests a meeting with the person

 

designated under subdivision (c), foreclosure proceedings will not

 

be commenced until 90 days after the date the notice is mailed to

 

the borrower.

 


     (f) That if the borrower and the person designated under

 

subdivision (c) reach an agreement to modify the mortgage loan, the

 

mortgage will not be foreclosed if the borrower abides by the terms

 

of the agreement.

 

     (g) That if the borrower and the person designated under

 

subdivision (c) do not agree to modify the mortgage loan but it is

 

determined that the borrower meets criteria for a modification

 

under section 3205c(1) and foreclosure under this chapter is not

 

allowed under section 3205c(7), the foreclosure of the mortgage

 

will proceed before a judge instead of by advertisement.

 

     (h) That the borrower has the right to contact an attorney,

 

and the telephone numbers of the state bar of Michigan's lawyer

 

referral service and of a local legal aid office serving the area

 

in which the property is situated.

 

     (2) A person who serves a notice under subsection (1) shall

 

enclose with the notice a list prepared by the Michigan state

 

housing development authority under section 3205d of the names,

 

addresses, and telephone numbers of housing counselors approved by

 

the United States department of housing and urban development or

 

the Michigan state housing development authority.

 

     (3) A person shall serve a notice under subsection (1) by

 

mailing the notice by regular first-class mail and by certified

 

mail, return receipt requested, with delivery restricted to the

 

borrower, both sent to the borrower's last known address.

 

     (4) Within 7 days after mailing a notice under subsection (3),

 

the person who mails the notice shall publish a notice informing

 

the borrower of the borrower's rights under this section. The

 


person shall publish the information 1 time in the same manner as

 

is required for publishing a notice of foreclosure sale under

 

section 3208. The notice under this subsection shall contain all of

 

the following information:

 

     (a) The borrower's name and the property address.

 

     (b) A statement that informs the borrower of all of the

 

following:

 

     (i) That the borrower has the right to request a meeting with

 

the mortgage holder or mortgage servicer.

 

     (ii) The name of the person designated under subsection (1)(c)

 

as the person to contact and that has the authority to make

 

agreements under sections 3205b and 3205c.

 

     (iii) That the borrower may contact a housing counselor by

 

visiting the Michigan state housing development authority's website

 

or by calling the Michigan state housing development authority.

 

     (iv) The website address and telephone number of the Michigan

 

state housing development authority.

 

     (v) That if the borrower requests a meeting with the person

 

designated under subsection (1)(c), foreclosure proceedings will

 

not be commenced until 90 days after the date notice is mailed to

 

the borrower.

 

     (vi) That if the borrower and the person designated under

 

subsection (1)(c) reach an agreement to modify the mortgage loan,

 

the mortgage will not be foreclosed if the borrower abides by the

 

terms of the agreement.

 

     (vii) That the borrower has the right to contact an attorney,

 

and the telephone number of the state bar of Michigan's lawyer

 


referral service.

 

     (5) A borrower on whom notice is required to be served under

 

this section who is not served and against whom foreclosure

 

proceedings are commenced under this chapter may bring an action in

 

the circuit court for the county in which the mortgaged property is

 

situated to enjoin the foreclosure.

 

     (6) If the borrower and the person designated under subsection

 

(1)(c) have previously agreed to modify the mortgage loan under

 

section 3205b, this section and sections 3205b and 3205c do not

 

apply unless the borrower has complied with the terms of the

 

mortgage loan, as modified, for 1 year after the date of the

 

modification.

 

     Sec. 3205b. (1) A borrower who wishes to participate in

 

negotiations to attempt to work out a modification of a mortgage

 

loan shall contact a housing counselor from the list provided under

 

section 3205a within 14 days after the list is mailed to the

 

borrower. Within 10 days after being contacted by a borrower, a

 

housing counselor shall inform the person designated under section

 

3205a(1)(c) in writing of the borrower's request.

 

     (2) After being informed of a borrower's request to meet under

 

this section, the person designated under section 3205a(1)(c) may

 

request the borrower to provide any documents that are necessary to

 

determine whether the borrower is eligible for a modification under

 

section 3205c. The borrower shall give the person designated under

 

section 3205a(1)(c) copies of any documents requested under this

 

section within 10 business days after the request for the

 

documents. If the borrower does not provide the documents requested

 


as required by this subsection, a party entitled to foreclose the

 

mortgage may proceed with the foreclosure.

 

     (3) A housing counselor from the list provided under section

 

3205a contacted by a borrower under this section shall schedule a

 

meeting between the borrower and the person designated under

 

section 3205a(1)(c) to attempt to work out a modification of the

 

mortgage loan. At the request of the borrower, the a housing

 

counselor from the list provided under section 3205a will attend

 

the meeting. The meeting and any later meetings shall be held at a

 

time and place that is convenient to all parties, or in the county

 

where the property is situated.

 

     Sec. 3205d. (1) The Michigan state housing development

 

authority shall develop the a list of housing counselors approved

 

by the United States department of housing and urban development or

 

by the Michigan state housing development authority who may perform

 

the duties of housing counselor under sections 3205a to 3205c.

 

     (2) A person who is not on the list of housing counselors

 

developed under this section shall not perform the duties of

 

housing counselor under sections 3205a to 3205c.

 

     (3) A person who is not on the list of housing counselors

 

developed under this section shall not represent that the person is

 

entitled to perform the duties of housing counselor under sections

 

3205a to 3205c.

 

     (4) A person who violates subsection (2) or (3) is guilty of a

 

misdemeanor punishable by imprisonment for not more than 90 days or

 

a fine of not more than $500.00, or both.

 

     Enacting section 1. Section 3205e of the revised judicature

 


act of 1961, 1961 PA 236, MCL 600.3205e, is repealed.