New Michigan Foreclosure Laws – Again!
On June 20th, the State House and Senate approved a package of 4 bills that are again changing the foreclosure process in Michigan. This has been an ongoing process where the foreclosure process has been changed several times due to “Sunset Provisions” that were included in the prior bills. “Sunset Provisions” are provisions that have the old law set to expire if changes are not made in the future, so if the legislature does not act, the law will expire. The first mortgage foreclosure bills change happened in 2009, where the legislature added a provision requiring Mortgage Companies to offer loss mitigation options prior to foreclosing on residential properties.
The point of the 2009 change was to prevent mortgage companies from foreclosing for an additional 90 days if you reached out to the mortgage company and requested loss mitigation. This 2009 provision was due to expire in June of 2011, so through a last moment rush in the state legislature the 2011 changes were proposed, and signed in to law.
The 2011 changes again extended the loss mitigation options for two years; however, the banks through their banking lobbyists also forced through additional changes to the foreclosure laws. First, the banks were able to shorten the redemption on residential property of over 3 acres from 1 year to 6 months. Second, banks were able to reduce their posting responsibilities under the loss mitigation options, essentially removing the list of people having mortgage trouble from public record. Lastly, banks requested and received the right to go after the prior owners of property if they were to damage the property in any way prior to leaving.
Now, there are the 2013 changes to Michigan’s foreclosure law. Once again the state legislature waited to the last moment to rush these bills through the legislature. The reason once again was because the loss mitigation was again going to expire at the end of June if they did not get this done. Of course with the help and assistance of the banking lobbyists just extending the loss mitigation option was not the only changes that came out of the rush of passing bills before the legislature took their summer vacation.
In credit to the legislature, they made the loss mitigation process a permanent fixture in Michigan foreclosure law and removed the sunset provisions that kept making them make changes every two years. Also, in credit to the legislature they resisted the pressure from the big banks to change the redemption period from 6 months to 2 months as the banks were requesting. However, the legislature did make one change that is going to have dramatic change to people going through the foreclosure process. The bank now gets to periodically inspect both the INSIDE and the OUTSIDE of your home. If you refuse to let them in your redemption period can be cancelled and full title of the property immediately passes to the bank. Below is the section the bill that has to these changes:
AFTER THE SALE UNDER SECTION 3220 AND PERIODICALLY THROUGHOUT THE REDEMPTION PERIOD, THE PURCHASER AT THE SALE MAY INSPECT THE EXTERIOR AND INTERIOR OF THE PROPERTY AND ALL ANCILLARY STRUCTURES. IF INSPECTION IS UNREASONABLY REFUSED OR IF DAMAGE TO THE PROPERTY IS IMMINENT OR HAS OCCURRED, THE PURCHASER MAY IMMEDIATELY COMMENCE SUMMARY PROCEEDINGS FOR POSSESSION OF THE PROPERTY UNDER CHAPTER 57 OR FILE AN ACTION FOR ANY OTHER RELIEF NECESSARY TO PROTECT THE PROPERTY FROM DAMAGE. IF A JUDGMENT FOR POSSESSION IS ENTERED IN FAVOR OF THE PURCHASER, THE RIGHT OF REDEMPTION IS EXTINGUISHED AND FULL TITLE TO THE PROPERTY VESTS IN THE PURCHASER.
AS USED IN THIS SUBSECTION, “DAMAGE” INCLUDES, BUT IS NOT LIMITED TO, ANY OF THE FOLLOWING:
a) THE FAILURE TO COMPLY WITH LOCAL ORDINANCES REGARDING MAINTENANCE OF THE PROPERTY, IF THE FAILURE IS THE SUBJECT OF GOVERNMENTAL UNIT.
b) A BOARDED UP OR CLOSED OFF WINDOW OR ENTRANCE.
c) MULTIPLE BROKEN AND UNREPAIRED WINDOW PANES.
d) A SMASHED THROUGH, BROKEN OFF, OR UNHINGED DOOR.
e) ACCUMULATED RUBBISH, TRASH, OR DEBRIS.
f) STRIPPED PLUMBING, ELECTRICAL WIRING, SIDING, OR OTHER METAL MATERIAL.
g) MISSING FIXTURES, INCLUDING, BUT NOT LIMITED TO, A FURNACE, WATER HEATER, OR AIR CONDITIONING UNIT.
h) DETERIORATION BELOW, OR BEING IN IMMINENT DANGER OF DETERIORATING BELOW, COMMUNITY STANDARDS FOR PUBLIC SAFETY AND SANITATION.
i) A CONDITION THAT WOULD JUSTIFY RECOVERY OF THE PREMISES UNDER SECTION 5714(1)(D).
So thanks to the Michigan legislature you still have your 6 month redemption period; however, you better beware that you will now be subject to random inspections of the INSIDE and OUTSIDE of your home. If you don’t let them in your redemption period may be cancelled. You also have to love the above list, so broad and over inclusive that lots of homes could fit into one of the categories listed above. Lastly, the safety issues associated with you now being required to let a total stranger into your home that you have no idea who they are. I can only imagine where this is going to go. We still have to wait and see if the Governor signs these bills, only time will tell.
Peter & Jeri Behrmann are Livonia Bankruptcy Attorneys. From our Livonia, Michigan location, we represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. Our practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.