February 24, 2009, Introduced by Reps. Coulouris, 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 and Leland and referred to the Committee on Banking and Financial Services.
A bill to amend 1961 PA 236, entitled
"Revised judicature act of 1961,"
(MCL 600.101 to 600.9947) by adding sections 3205a and 3205b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3205a. (1) Subject to subsection (6), before proceeding
with a sale under this chapter of property described in section
3240(8) that is used as a principal residence, the mortgage holder
or mortgage servicer 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 and the mortgage servicer, or an agent designated
by the mortgage holder or mortgage servicer, and a statement of
which of them is designated as the entity to contact and that has
the authority to make agreements under sections 3205b to 3205c.
(c) That the borrower will receive a list of housing
counselors from the Michigan state housing development authority
and within 14 days after receiving the list may request a meeting
with the mortgage holder or mortgage servicer to attempt to work
out a modification of the mortgage loan to avoid foreclosure and
that the borrower may also request the housing counselor to attend
the meeting.
(d) That if the borrower requests a meeting with the mortgage
holder or mortgage servicer, foreclosure proceedings will not be
commenced until 90 days after the date the borrower is served with
the notice.
(e) That if the borrower and the mortgage holder or mortgage
servicer reach an agreement to modify the mortgage loan, the
mortgage will not be foreclosed if the borrower abides by the terms
of the agreement.
(f) That if the borrower and the mortgage holder or mortgage
servicer do not agree to modify the mortgage loan but it is
determined that the borrower meets criteria for a modification
under the FDIC workout program, the foreclosure of the mortgage
will proceed before a judge instead of by advertisement.
(g) 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 mortgage holder or mortgage servicer shall serve the
notice under this section by having the notice delivered personally
to the borrower and sent by certified mail, return receipt
requested, with delivery restricted to the borrower at the
borrower's last known address.
(3) At the time of mailing a notice under subsection (2), the
mortgage holder or mortgage servicer shall publish a copy of the
notice 1 time in the same manner as is required for publishing a
notice of foreclosure sale under section 3208.
(4) On obtaining service under subsection (2), a mortgage
holder or mortgage servicer shall give the Michigan state housing
development authority notice of the service and a copy of the
notice. Within 10 days after receiving notice under this
subsection, the Michigan state housing development authority shall
send the borrower both of the following:
(a) A list prepared by the Michigan state housing development
authority 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.
(b) Notice that if the borrower wishes to meet with the
mortgage holder or mortgage servicer to attempt to reach an
agreement to modify the mortgage loan, the borrower must contact a
housing counselor from the list within 14 days after the list and
notice under this subdivision are sent to the borrower.
(5) A borrower on whom notice is required to be served under
subsection (2) 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) This section and sections 3205b to 3205d do not apply if
the borrower has previously agreed with a mortgage holder or
mortgage servicer to modify the mortgage loan and the borrower has
not 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 sent to the
borrower. Within 10 days after being contacted by a borrower, a
housing counselor shall inform the mortgage holder or mortgage
servicer of the borrower's request.
(2) If requested by the mortgage holder or mortgage servicer,
the borrower shall give the mortgage holder or servicer copies of
any documents requested by the mortgage holder or mortgage servicer
that are necessary to determine the financial status of the
borrower for purposes of this chapter.
(3) The housing counselor shall schedule a meeting between the
borrower and the mortgage holder or servicer to attempt to work out
a modification of the mortgage loan. At the request of the
borrower, the housing counselor 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.
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. 4453(request no.
02074'09).
(b) Senate Bill No.____ or House Bill No. 4455(request no.
02274'09).