Act No. 31
Public Acts of 2009
Approved by the Governor
May 20, 2009
Filed with the Secretary of State
May 21, 2009
EFFECTIVE DATE: July 5, 2009
STATE OF MICHIGAN
REGULAR SESSION OF 2009
Introduced by Reps. Johnson, Roy Schmidt, Simpson, Robert Jones, Cushingberry, Slavens, Lisa Brown, Roberts, Corriveau, Scripps, Kennedy, Huckleberry, Haase, Haugh, Liss, Tlaib, Segal, Switalski, Bledsoe, Nerat, Smith, Ebli, Barnett, Melton, Nathan, Miller, Leland, Angerer, Bauer, Terry Brown, Byrnes, Constan, Dean, Dillon, Donigan, Durhal, Espinoza, Geiss, Gonzales, Gregory, Hammel, Jackson, Lipton, Neumann, Polidori, Bettie Scott, Sheltrown, Slezak, Stanley and Young
ENROLLED HOUSE BILL No. 4455
AN ACT to amend 1961 PA 236, entitled “An act to revise and consolidate the statutes relating to the organization and jurisdiction of the courts of this state; the powers and duties of such courts, and of the judges and other officers thereof; the forms and attributes of civil claims and actions; the time within which civil actions and proceedings may be brought in said courts; pleading, evidence, practice and procedure in civil and criminal actions and proceedings in said courts; to provide remedies and penalties for the violation of certain provisions of this act; to repeal all acts and parts of acts inconsistent with or contravening any of the provisions of this act; and to repeal acts and parts of acts,” (MCL 600.101 to 600.9947) by adding sections 3205c, 3205d, and 3205e; and to repeal acts and parts of acts.
The People of the State of Michigan enact:
Sec. 3205c. (1) If a borrower has contacted a housing counselor under section 3205b but the process has not resulted in an agreement to modify the mortgage loan, the person designated under section 3205a(1)(c) shall work with the borrower to determine whether the borrower qualifies for a loan modification. Unless the loan is described in subsection (2) or (3), in making the determination under this subsection, the person designated under section 3205a(1)(c) shall use a loan modification program or process that includes all of the following features:
(a) The loan modification program or process targets a ratio of the borrower’s housing-related debt to the borrower’s gross income of 38% or less, on an aggregate basis. Housing-related debt under this subdivision includes mortgage principal and interest, property taxes, insurance, and homeowner’s fees.
(b) To reach the 38% target specified in subdivision (a), 1 or more of the following features:
(i) An interest rate reduction, as needed, subject to a floor of 3%, for a fixed term of at least 5 years.
(ii) An extension of the amortization period for the loan term, to 40 years or less from the date of the loan modification.
(iii) Deferral of some portion of the amount of the unpaid principal balance of 20% or less, until maturity, refinancing of the loan, or sale of the property.
(iv) Reduction or elimination of late fees.
(2) In making the determination under subsection (1), if the mortgage loan is pooled for sale to an investor that is a governmental entity, the person designated under section 3205a(1)(c) shall follow the modification guidelines dictated by the governmental entity.
(3) In making the determination under subsection (1), if the mortgage loan has been sold to a government-sponsored enterprise, the person designated under section 3205a(1)(c) shall follow the modification guidelines dictated by the government-sponsored enterprise.
(4) This section does not prohibit a loan modification on other terms or another loss mitigation strategy instead of modification if the other modification or strategy is agreed to by the borrower and the person designated under section 3205a(1)(c).
(5) The person designated under section 3205a(1)(c) shall provide the borrower with both of the following:
(a) A copy of any calculations made by the person under this section.
(b) If requested by the borrower, a copy of the program, process, or guidelines under which the determination under subsection (1) was made.
(6) Subject to subsection (7), if the results of the calculation under subsection (1) are that the borrower is eligible for a modification, the mortgage holder or mortgage servicer shall not foreclose the mortgage under this chapter but may proceed under chapter 31. If the results of the calculation under subsection (1) are that the borrower is not eligible for a modification or if subsection (7) applies, the mortgage holder or mortgage lender may foreclose the mortgage under this chapter.
(7) If the determination under subsection (1) is that the borrower is eligible for a modification, the mortgage holder or mortgage servicer may proceed to foreclose the mortgage under this chapter if both of the following apply:
(a) The person designated under section 3205a(1)(c) has in good faith offered the borrower a modification agreement prepared in accordance with the modification determination.
(b) For reasons not related to any action or inaction of the mortgage holder or mortgage servicer, the borrower has not executed and returned the modification agreement within 14 days after the borrower received the agreement.
(8) If a mortgage holder or mortgage servicer begins foreclosure proceedings under this chapter in violation of this section, the borrower may file an action in the circuit court for the county where the mortgaged property is situated to convert the foreclosure proceeding to a judicial foreclosure. If a borrower files an action under this section and the court determines that the borrower participated in the process under section 3205b, a modification agreement was not reached, and the borrower is eligible for modification under subsection (1), and subsection (7) does not apply, the court shall enjoin foreclosure of the mortgage by advertisement and order that the foreclosure proceed under chapter 31.
Sec. 3205d. The Michigan state housing development authority shall develop the 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.
Sec. 3205e. Sections 3205a to 3205d are repealed effective 2 years after the effective date of the amendatory act that added this section.
Enacting section 1. This amendatory act takes effect 45 days after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect unless all of the following bills of the 95th Legislature are enacted into law:
(a) House Bill No. 4453.
(b) House Bill No. 4454.
This act is ordered to take immediate effect.
Clerk of the House of Representatives
Secretary of the Senate