HOUSE BILL No. 4542

 

April 13, 2011, Introduced by Reps. Farrington, Pettalia, Lyons, Knollenberg and Liss and referred to the Committee on Banking and Financial Services.

 

     A bill to amend 1961 PA 236, entitled

 

"Revised judicature act of 1961,"

 

by amending sections 3204 and 3205 (MCL 600.3204 and 600.3205),

 

section 3204 as amended and section 3205 as added by 2009 PA 29.

 

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)

 

claimed as a principal residence exempt from tax under section 7cc

 

of the general property tax act, 1893 PA 206, MCL 211.7cc, 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 20 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) Documents have been requested under section 3205b(2) and

 

the time for producing the documents has not expired.

 

     (e) (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.

 

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

 

mortgage loan and the mortgagor is not in default under the

 

modified agreement.

 

     (g) (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 July 5, 2009 and before 2 years after the effective date


 

of the amendatory act that added this subsection July 5, 2012.

 

     Sec. 3205. (1) After the effective date of the amendatory act

 

that added this subsection, before a party foreclosing a mortgage

 

sends a notice under section 3205a(1), the mortgage holder or

 

mortgage servicer shall designate an individual who is an employee

 

or agent of the mortgage holder, the mortgage servicer, or another

 

entity that is an agent of the mortgage holder or mortgage servicer

 

to serve as a contact under sections 3205a to 3205c.

 

     (2) The mortgage holder or mortgage servicer that designates

 

an individual under subsection (1) shall authorize the individual

 

to facilitate negotiations and attend meetings with the borrower.

 

If the individual is not also designated as the individual

 

authorized to make agreements to modify the mortgage under sections

 

3205a to 3205c on behalf of the mortgage holder or mortgage

 

servicer, the mortgage holder or mortgage servicer shall ensure

 

that an individual who is so authorized is available by telephone

 

at all meetings with the borrower.

 

     (3) As used in this section and sections 3205a to 3205d:

 

     (a) "Borrower" means the mortgagor.

 

     (b) "Mortgage holder" means the owner of the indebtedness or

 

of an interest in the indebtedness that is secured by the mortgage.

 

     (c) "Mortgage servicer" means the servicing agent of the

 

mortgage.

 

     Enacting section 1. This amendatory act does not take effect

 

unless all of the following bills of the 96th Legislature are

 

enacted into law:

 

     (a) Senate Bill No. _______ or House Bill No. 4543


 

(request no. 01990'11).

 

     (b) Senate Bill No. _______ or House Bill No. 4544

 

(request no. 01991'11).