June 12, 2008, Introduced by Reps. Scott, Polidori, Jackson, Kathleen Law, Young, Hood, Brown, Espinoza, Lemmons, Virgil Smith, Gaffney and Dean 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 the title and sections 3115, 3204, and 3236 (MCL
600.3115, 600.3204, and 600.3236), the title as amended by 1999 PA
239 and section 3204 as amended by 2004 PA 186, and by adding
sections 3116, 3117, 3205, 3237, and 3238.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
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 provide for the powers and duties of
certain state governmental agencies; to authorize the promulgation
of rules; 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.
Sec.
3115. Whenever a complaint is filed Subject to sections
3116 and 3117, in an action for the foreclosure or satisfaction of
any
a mortgage on real estate or land contract, the court has
power
to
may order a sale of the premises which that are
the subject of
the
mortgage on real estate or land contract, or of that part of
the
premises which that is sufficient to discharge the amount due
on
the mortgage on real estate or land contract plus costs. But the
circuit
judge The court shall not order that the lands subject to
the mortgage be sold within 6 months after the filing of the
complaint
for foreclosure of the mortgage or that the lands which
that are the subject of the land contract be sold within 3 months
after the filing of the complaint for foreclosure of the land
contract.
Sec. 3116. (1) Before commencing an action to foreclose a
mortgage of residential property under this chapter, the plaintiff
shall send a notice in the form adopted under subsection (2) to the
mortgagor. The plaintiff shall send a notice under this subsection
by certified mail to the mortgagor's last known address no earlier
than 60 days after the mortgagor becomes delinquent in the payment
of principal or interest under the mortgage or violates any other
provision of the mortgage.
(2) The Michigan state housing development authority shall
adopt a notice under the administrative procedures act of 1969,
1969 PA 306, MCL 24.201 to 24.328, which shall be in plain language
and include all of the following:
(a) A statement that the mortgagor is delinquent in making a
principal or interest payment or is otherwise in default under the
mortgage and, unless the mortgagor has a face-to-face meeting
within 30 days after the date of the notice with the person who
sent the notice or a consumer credit counseling agency to attempt
to resolve the delinquency or default by restructuring the loan
payment schedule or otherwise, the person who sent the notice may
proceed to foreclose the mortgage.
(b) A place to include the name, telephone number, and address
of a local consumer credit counseling agency.
(3) A person shall not commence an action to foreclose a
mortgage of residential property under this chapter or take any
other action to recover or enforce the indebtedness secured by the
mortgage until the later of 33 days after sending a notice to the
mortgagor under subsection (1) or, if the mortgagor meets with the
mortgagee under subsection (4) or a credit counseling agency under
subsection (5), until the expiration of the applicable time period
under subsection (4) or (5).
(4) If a mortgagor meets with a mortgagee in accordance with a
notice under subsection (1), the mortgagee shall not commence an
action to foreclose the mortgage until 30 days after the date the
mortgagor first meets with the mortgagee.
(5) If a mortgagor meets with a consumer credit counseling
agency in accordance with a notice under subsection (1), the
consumer credit counseling agency shall promptly notify all persons
that hold mortgages of the mortgagor's real property of the
meeting. A person notified under this subsection shall not commence
an action to foreclose a mortgage of the property until 30 days
after the date that the mortgagor first meets with the consumer
credit counseling agency.
(6) In an action to foreclose a mortgage of residential
property under this chapter that was filed before the effective
date of the amendatory act that added this section but in which the
property has not been sold under a judgment on the effective date
of the amendatory act that added this section, the court shall
issue a temporary stay of the action until the later of 33 days
after a notice under subsection (1) has been sent to the defendant
or, if the defendant meets with the mortgagee or a credit
counseling agency under this section, until the expiration of the
applicable time period under subsection (4) or (5). The plaintiff
in an action that is stayed under this subsection shall send the
defendant a notice under subsection (1).
(7) A plaintiff is not required to send a notice under
subsection (1) if 1 or more of the following apply:
(a) The mortgagor is more than 24 consecutive or
nonconsecutive months in arrears in payments under the mortgage.
(b) The total amount due under the mortgage, not including any
accelerated balance but including principal, interest, taxes,
assessments, ground rents, hazard insurance, or mortgage insurance
or credit insurance premiums, is more than $60,000.00.
(c) The mortgagor has received a notice under subsection (1)
from another person who holds a mortgage of the subject property.
(8) A plaintiff is not required to send a second or subsequent
notice under subsection (1) if either of the following applies:
(a) The mortgagee has received only partial payment of arrears
from the mortgagor under any agreement made under this section
after the previous notice.
(b) A notice was sent under subsection (1) while the mortgagor
was in bankruptcy, regardless of whether the mortgagor received a
discharge, the bankruptcy petition was dismissed, or the mortgagee
was given relief from the automatic stay.
Sec. 3117. (1) In an action to foreclose a mortgage of
residential property in which a judgment of foreclosure has not
been entered by the effective date of the amendatory act that added
this section, the court, on motion of a defendant, shall order the
action stayed until 1 year after the effective date of the
amendatory act that added this section.
(2) In an action to foreclose a mortgage of residential
property in which a judgment of foreclosure has been entered but
the period of redemption has not expired by the effective date of
the amendatory act that added this section, the court, on motion of
a defendant, shall do 1 of the following:
(a) If the property has not been sold under the judgment,
amend the judgment to include a stay of the sale until 1 year after
the effective date of the amendatory act that added this section.
(b) If the property has been sold under the judgment, include
in the order confirming the report of sale or, if the order
confirming the report of sale has been entered, amend the order to
include a provision extending the period of redemption until 1 year
after the effective date of the amendatory act that added this
section. The register of deeds shall indorse, record, and index an
order amending an order confirming the report of sale under this
subdivision in the manner provided for deeds of sale under section
3130 and note the existence of the order amending the order
confirming the report of sale on the record of the deed of sale.
(3) Subject to subsection (4), the court may include in an
order entered under subsection (1) or a judgment or order entered
under subsection (2) any of the following provisions relating to
the property during the stay or extension:
(a) Possession of the property. In making an order under this
subdivision, the court shall give preference to the owner in
possession.
(b) A fair amount to be paid as rental by the person in
possession.
(c) The application of money received from rent under
subdivision (b) or any other income or profits of the property. The
court may order that payment and distribution of money be made
through the clerk of the court or another person.
(d) Preservation of the property, including payment of taxes
and maintenance of insurance.
(4) If the parties to an action under this chapter have agreed
to restructure the loan payment schedule or made another agreement
under section 3116, unless the court determines that there is good
cause to order otherwise, the provisions included in an order or
judgment under subsection (3) shall not contradict the agreement.
(5) The court may set aside or modify an order or judgment
entered under subsection (1) or (2) if a defendant substantially
violates a provision ordered under subsection (3) or (4) or for any
other reason that the court determines in its discretion to justify
the change. If an order or judgment entered under subsection (1) or
(2) is set aside, the rights of a person interested in the property
that were affected by the order or judgment are reinvested in the
person effective the date the order or judgment is set aside as if
the order or judgment had not been entered.
(6) This section does not apply if the defendant has failed to
meet with the mortgagee or a credit counseling agency as described
in section 3116(4) and (5) after receiving a notice under section
3116(1).
Sec. 3204. (1) 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.
(e) If the mortgage is of residential property, the party has
given notice as required under section 3205 and 33 days have passed
since sending the notice or, if the mortgagor has met with the
party or a credit counseling agency under section 3205, the
applicable time period under section 3205(3) or (4) has expired,
whichever is later.
(f) If the mortgage is of residential property, the owner of
the mortgaged property or a person liable under the mortgage or
mortgage note has not filed an action under subsection (4).
(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) Before 1 year after the effective date of the amendatory
act that added this subsection, the owner of mortgaged residential
property or a person liable under a mortgage of or mortgage note
relating to residential property may file an action in the circuit
court for the county where the property is located to enjoin
foreclosure of the mortgage by advertisement. The court in an
action filed under this subsection shall enjoin foreclosure of the
mortgage by advertisement and order the foreclosure to proceed
under chapter 31. This subsection does not apply if the owner or
person liable has failed to meet with the mortgagee or a credit
counseling agency as described in section 3205(3) and (4) after
receiving a notice under section 3205(1).
Sec. 3205. (1) Before taking any action to foreclose a
mortgage of residential property by advertisement under this
chapter, the person foreclosing the mortgage shall send a notice in
the form adopted under section 3116(2) to the mortgagor. The person
shall send a notice under this subsection by certified mail to the
mortgagor's last known address no earlier than 60 days after the
mortgagor becomes delinquent in the payment of principal or
interest under the mortgage or violates any other provision of the
mortgage.
(2) A person shall not take any action to foreclose a mortgage
of residential property by advertisement under this chapter or take
any other action to recover or enforce the indebtedness secured by
the mortgage until the later of 33 days after sending a notice to
the mortgagor under subsection (1) or, if the mortgagor meets with
the mortgagee or a credit counseling agency under this section,
until the expiration of the applicable time period under subsection
(3) or (4).
(3) If a mortgagor meets with a mortgagee in accordance with a
notice under subsection (1), the mortgagee shall not take any
action to foreclose the mortgage until 30 days after the date the
mortgagor first meets with the mortgagee.
(4) If a mortgagor meets with a consumer credit counseling
agency in accordance with a notice under subsection (1), the
consumer credit counseling agency shall promptly notify all persons
that hold mortgages of the mortgagor's real property of the
meeting. A person notified under this subsection shall not take any
action to foreclose a mortgage of the property until 30 days after
the date that the mortgagor first meets with the consumer credit
counseling agency.
(5) A person is not required to send a notice under subsection
(1) if either of the following applies:
(a) The mortgagor is more than 24 consecutive or
nonconsecutive months in arrears in payments under the mortgage.
(b) The total amount due under the mortgage, not including any
accelerated balance but including principal, interest, taxes,
assessments, ground rents, hazard insurance, or mortgage insurance
or credit insurance premiums, is more than $60,000.00.
(c) The mortgagor has received a notice under subsection (1)
from another person who holds a mortgage of the subject property.
(6) A person is not required to send a second or subsequent
notice under subsection (1) if either of the following applies:
(a) The person has received only partial payment of arrears
from the mortgagor under any agreement reached under this section
with the mortgagor to restructure the payment schedule.
(b) A notice was sent under subsection (1) while the mortgagor
was in bankruptcy, regardless of whether the mortgagor received a
discharge, the bankruptcy petition was dismissed, or the mortgagee
was given relief from the automatic stay.
Sec.
3236. (1) Unless Except
as provided in section 3237,
unless
the premises described in such the deed
shall be of sale are
redeemed
within the time limited for such applicable period of
redemption
as hereinafter provided , such in
this chapter, the deed
shall
thereupon become becomes operative
, on the expiration of the
period
of redemption and shall vest vests in
the grantee therein
named ,
his in the deed or the
grantee's heirs or assigns , all the
right,
title, and interest which the mortgagor had at the time of
the
execution of the mortgage, or at any time thereafter after the
execution, except as to any parcel or parcels which may that have
been
redeemed and canceled, as hereinafter provided ;
and the in
this chapter.
(2)
After the period of redemption expires, the record thereof
shall
thereafter, of the deed of
sale is for all purposes be deemed
a
valid record of said the deed of
sale without
being re-recorded.
,
but no However, a person having any who has a valid subsisting
lien
upon on the mortgaged premises, or any part thereof of the
mortgaged
premises, created before the lien of such
the mortgage
took
effect, shall not be prejudiced by any such the sale,
nor
shall
his and the person's rights or interests be are not in
any
way
affected thereby by the sale.
Sec. 3237. If the applicable period of redemption provided
under this chapter for a mortgage of residential property that is
being foreclosed by advertisement has not expired before the
effective date of the amendatory act that added this section, the
person foreclosing the mortgage shall send the mortgagor a notice
in the form adopted under section 3116(2) and, if the sale has been
conducted, shall send a copy of the notice to the person who
purchased the property at the sale. Section 3205(3) to (6) applies
after a notice is sent under this section. The person foreclosing
the mortgage and any purchaser shall take no further action toward
foreclosure until the later of 33 days after the notice has been
sent to the mortgagor or, if the mortgagor has met with the
mortgagee or a credit counseling agency in accordance with the
notice, the expiration of the applicable time period under section
3205(3) or (4).
Sec. 3238. (1) If the applicable period of redemption provided
under this chapter for a mortgage of residential property that is
being foreclosed by advertisement has not expired by 1 year after
the effective date of the amendatory act that added this section, a
person described in subsection (2) may file a complaint in the
circuit court for the county in which the property is located
requesting the relief described in subsection(3).
(2) One or more of the following may file an action under this
section:
(a) The mortgagor.
(b) The owner of the mortgaged property.
(c) A person who is liable on the mortgage or note.
(3) The court in an action under this section shall enter an
order enjoining until 1 year after the effective date of the
amendatory act that added this section the issuance of a writ of
restitution or other order to give a purchaser under a deed of sale
possession of the mortgaged property. Subject to subsection (4),
the court may include in the order a provision listed in section
3116(3).
(4) If the parties to an action under this section have agreed
to restructure the loan payment schedule or made another agreement
under section 3205, unless the court determines that there is good
cause to order otherwise, the provisions included in an order under
subsection (3) shall not contradict the agreement.
(5) The register of deeds shall indorse, record, and index an
order under subsection (3) in the manner provided for deeds of sale
under section 3232 and note the existence of the order on the
record of the deed of sale.
(6) The court may set aside or modify an order entered under
subsection (3) if a defendant substantially violates a provision
listed in section 3116(3) that is included in the order or for any
other reason that the court determines in its discretion to justify
the change. If an order entered under subsection (3) is set aside,
the rights of a person interested in the property that were
affected by the order are reinvested in the person effective the
date the order is set aside as if the order had not been entered.
(7) This section does not apply if the defendant has failed to
meet with the mortgagee or a credit counseling agency as described
in section 3204(3) and (4) after receiving a notice under section
3205(1).