The Michigan legislature recently amended its laws relating to foreclosure proceedings.
MICHIGAN HOUSE BILL 4542 (effective December 28, 2011)
A party must not commence proceedings to foreclose a mortgage on property claimed as a principal residence with a homestead exemption if:
- After a notice is mailed to the borrower, the time for the borrower to request, either directly or through a housing counselor, a meeting with the mortgage holder, the mortgage servicer, or any agent designated by the mortgage holder or mortgage servicer (the “designee”), has not expired;
- Within 30 (previously 14) days after a notice is mailed to the borrower, the borrower has requested a meeting to attempt to work out a modification of the mortgage loan between the borrower and the designee, unless the borrower has failed to provide the required documents; or
- Documents have been requested and the time for producing the documents has not expired.
This does not apply to a mortgage of property used for agricultural purposes if the mortgage is subject to borrower’s rights under certain federal acts.
For a foreclosure proceeding in which the first notice is mailed to the borrower on or after February 1, 2012, a mortgage holder or mortgage servicer must 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, or a specific department or unit of the mortgage holder, the mortgage servicer, to serve as a contact. The mortgage holder or mortgage servicer that designates an individual, department, or unit must authorize the individual or, if the designee is a department or unit, a representative of the department or unit to facilitate negotiations and attend meetings with the borrower.
Every notice of foreclosure by advertisement must include a statement that if the property is sold at a foreclosure sale, the borrower will be held responsible to the person who buys the property at the mortgage foreclosure sale or to the mortgage holder for damaging the property during the redemption period.
During the period of redemption following a foreclosure sale of property, the borrower and any other person liable on the mortgage is liable to the purchaser at the sale, or the lender, payee, or other holder of the obligation secured by the mortgage if the lender, payee, or other holder takes or has taken title to the property at the sale either directly or indirectly, for any physical injury to the property beyond wear and tear resulting from the normal use of the property if the physical injury is caused by or at the direction of the borrower or other person liable on the mortgage. In an action for damages, the amount of damages may be determined by any measure of damages applicable under law, including, but not limited to, damages for a landlord’s or property manager’s labor. An action for damages may be joined with an action for possession of the premises.
MICHIGAN HOUSE BILL 4543 (effective December 28, 2011)
Before beginning a sale of a principal residence with a homestead exemption, the foreclosing party must serve a written notice to the borrower. The notice must now also contain the name, address, designated telephone number, and designated e-mail address of the agent designated by the mortgage holder or mortgage servicer (the “designee”).
The written notice must state that:
- A list of housing counselors (the “list”) prepared by the Michigan State Housing Development Authority is enclosed with the notice and that the borrower may request a housing counselor from the list to attend any meetings with the designee;
- Within 30 (previously 14) days after sending the notice, the borrower may, either by contacting the person directly or by contacting a housing counselor from the list, request a meeting with the designee;
- The number of days in the redemption period that will be available to the borrower if the property is eventually sold at a foreclosure sale, unless the property is abandoned; and
- If the property is sold at a foreclosure sale, the borrower will be held responsible to the buyer at the mortgage foreclosure sale or to the mortgage holder for damaging the property during the redemption period.
If a borrower wishes to participate in negotiations to attempt to work out a modification of a mortgage loan, within 30 days after the notice is mailed to the borrower, the borrower must contact the designee or a housing counselor from the list. After being contacted by a borrower and within 30 days after the notice is mailed to the borrower, the housing counselor must inform the designee in writing of the borrower’s request.
Within 10 days after being contacted by a borrower or housing counselor, the designee may request the borrower to provide any documents that are necessary to determine whether the borrower is eligible for a modification. The borrower must give the designee copies of any documents requested within 60 days after the notice is mailed to the borrower. If the borrower does not provide the requested documents, a party entitled to foreclose the mortgage may proceed with the foreclosure.
After being informed that a borrower wishes to meet, the designee must schedule a meeting with the borrower to attempt to work out a modification of the mortgage loan. At the request of the borrower, a housing counselor from the list may attend the meeting. If a borrower has, either directly or through a housing counselor, contacted a designee, but the process has not resulted in an agreement to modify the mortgage loan, the designee must work with the borrower to determine whether the borrower qualifies for a loan modification.
Before 90 days after the required notice is sent or 10 days after the meeting between the borrower and the designee, whichever is later, the designee must provide the borrower with the copy of any calculations made and a copy of the program, process, or guidelines under which the determination was made, if requested by the borrower.
A person who is not on the list of housing counselors must not perform the duties of a housing counselor, nor represent that the person is entitled to perform the duties of a housing counselor. Attorneys are exempt if licensed to practice law in Michigan or if they provide mortgage assistance relief services as part of their practice of law. A violation will result in a misdemeanor, punishable by imprisonment for up to 90 days, a fine up to $2,000, or both.
MICHIGAN HOUSE BILL 4544 (effective December 28, 2011)
For a mortgage executed on or after January 1, 1965 of residential property not exceeding four units, (previously property less than three acres in size), if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 66-2/3% of the original indebtedness secured by the mortgage, the redemption period is six months.
The redemption period for a mortgage of property used for agricultural purposes is one year from the date of the sale. There is a presumption that property is used for agricultural purposes if, before the foreclosure sale, the borrower provides the party foreclosing the mortgage and the foreclosing party’s attorney proof that the borrower filed a schedule F to the borrower’s federal income tax form 1040 for the year preceding the year in which the proceedings to foreclose the mortgage were commenced and records an affidavit with the register of deeds for the county in which the property is located stating that the proof has been delivered. If the borrower fails to provide proof and record an affidavit before the foreclosure sale, there is a presumption that the property is not used for agricultural purposes. The party foreclosing the mortgage or the borrower may file a civil action to produce evidence to rebut the presumption. An action must be filed before the expiration of the redemption period that would apply if the property is determined not to be used for agricultural purposes.