Michigan Legislature Enacts Changes

Late last year, the Michigan legislature went back through and cleaned up some of the mess it made with its earlier changes to the consumer mortgage foreclosure laws. Effective December 22, 2011, the following three laws went into effect:

Public Act No. 301 allows a borrower to contact a mortgage holder or servicer directly or through a housing counselor, rather than only through a counselor; requires the contact to be made within 30 days (rather than 14 days) after a Notice of Foreclosure is mailed to the borrower; requires the mortgage holder or servicer to designate a contact person who will attend meetings and facilitate negotiations with the borrower; and provides that a borrower is liable for property damage caused during the redemption period following a foreclosure sale.

Public Act No. 302 deletes the requirement that the foreclosing party publish a notice of borrower’s rights (this is a huge change that will prevent a lot of fraud, as well as a lot of unnecessary embarrassment for debtors). The Act also: revises the foreclosure notice by, among other things, requiring the borrower to be informed of the number of days in the redemption period; sets deadlines for a borrower to provide requested documents and for a designated person to give certain information to the borrower; extends the contact period for modification negotiations to 30 days instead of 14 days; requires determination of qualification for modification information to be provided to a borrower within 90 days after the required notice was sent or 10 days after the meeting with the borrower, whichever is later; and delays repeal of the Mortgage Modification Program until December 31, 2012.

Public Act No. 303 deletes the three-acre limit on residential property subject to a six-month redemption period if the amount due exceeds two-thirds of the original loan; prescribes a one-year redemption period for property used for agricultural purposes; and establishes a rebuttable presumption that property was used for agricultural purposes if certain criteria are met.

Roger A. Bird and Eric J. Scheske

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