Michigan Revises Provisions Regarding Mortgage Modification Program

by: Zachary Pearlstein

Michigan has revised its mortgage modification program, and adopted provisions under the federal loss mitigation program, effective immediately. Under the revised bill:

• One may foreclose a mortgage by advertisement if:

a)     The power to sell has become operative through a default condition that has occurred with the mortgage;
b)     A legal action has not been instituted to recover the debt secured by the mortgage (or if there was such an action it has been discontinued); or a judgment has been unsatisfied;
c)      The mortgage (which contains the power of sale) has been properly recorded; and
d)     The foreclosing party has an interest in the indebtedness secured by the mortgage.

• If a mortgage is given to secure a series of installment payments, each installment after the first shall be treated as a separate mortgage, and the mortgage for each installment may be individually foreclosed. 

• If a party foreclosing by advertisement is not an original mortgagee, a record chain of title must show the assignment of the mortgage to that party.

• One may not commence a foreclosure proceedings on property claimed as a tax-exempt principal residence (under the general property tax act), if one or more of the following apply:

a)     Notice has not been mailed to the mortgagor;
b)     After a notice is mailed to the mortgagor, the time has not expired for the mortgagor to request a meeting;
c)      Within 30 days after a notice is mailed, the mortgagor has requested a meeting with the designated person (under section 3205a (1)(c)) and 90 days have not passed after the notice was mailed;
d)     Documents have been requested and the time for producing the documents has not expired;
e)     The mortgagor has requested a meeting with the designated person, the mortgagor has provided documents as required, and the designated person has not met or negotiated with the mortgagor;
f)      The mortgagor and mortgagee have agreed to modify the mortgage loan and the mortgagor is not in default under the modified agreement; or
g)     Calculations show that the mortgagor is eligible for a loan modification. 

• These provisions do not apply to a mortgage of property used for agricultural purposes if the mortgage is subject to borrower’s rights under the Federal Acts (The Farm Credit Act of 1971, Public Law 92-181, as amended, or the Consolidated Farm and Rural Development Act, Public Law 87-128) and is subject to the restructuring of distressed loans or the debt restructuring and loan servicing provisions of the Federal Acts.

About the Author
Zachary Pearlstein is Associate Counsel and Compliance Specialist at Bankers Advisory. He is a graduate of Brandeis University and earned his Juris Doctor at Suffolk Law School. He is admitted to the Massachusetts Bar. Zachary can be reached at zachary@bankersadvisory.com