MORTGAGE BORROWERS' RIGHTS                                                                   S.B. 578:

                                                                                                    SUMMARY OF BILL

                                                                                      REPORTED FROM COMMITTEE

Senate Bill 578 (as reported without amendment)

Sponsor:  Senator Darwin L. Booher

Committee:  Banking and Financial Institutions

CONTENT

The bill would amend the Consumer Mortgage Protection Act to require a lender to provide an applicant for a mortgage loan with a copy of a special information booklet described in 12 CFR 1024.6, issued under the authority of the Real Estate Settlement Procedures Act (RESPA), instead of a document called "Borrowers Bill of Rights".

(The Borrowers Bill of Rights specifies the rights of borrowers, such as the right to shop for the best loan and the right to be informed about the total cost of the loan. The special information booklet described in the Federal regulation addresses compliance with the requirements of the Truth in Lending Act and the RESPA, and must include, for example, an explanation of each cost incident to a real estate settlement, an explanation of the standard real estate settlement form, and an explanation of the unfair practices and unreasonable charges to be avoided by the prospective buyer.)

The bill also would repeal Section 7 of the Consumer Mortgage Protection Act, which requires a lender to provide an applicant with a written notice regarding the value of credit counseling before taking out a mortgage loan.

The bill would take effect 90 days after its enactment.

(The Consumer Mortgage Protection Act defines "mortgage loan" as a loan or home improvement installment contract secured by a first or subordinate mortgage or other form of lien or a land contract that covers real property located in Michigan that is used as the borrower's principal dwelling and is designed for occupancy by four or fewer families. The term does not include a loan transaction in which the proceeds are used to acquire the borrower's principal residence; a reverse-mortgage transaction; an open-end credit plan; or a loan transaction in which the proceeds are not used primarily for a personal, family, or household purpose.)

MCL 445.1632 et al.                                                          Legislative Analyst:  Jeff Mann

FISCAL IMPACT

The bill would have no fiscal impact on State or local government.

Date Completed:  11-13-15                                                Fiscal Analyst:  Glenn Steffens

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.