SB-0578, As Passed House, February 23, 2016

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 578

     A bill to amend 2002 PA 660, entitled

"Consumer mortgage protection act,"

by amending sections 2, 6, and 13 (MCL 445.1632, 445.1636, and

445.1643), section 2 as amended by 2012 PA 443; and to repeal acts

and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 2. As used in this act:

     (a) "Commissioner" or "director" means the commissioner of the

office of financial and insurance regulation of the department of

licensing and regulatory affairs.director of the department of

insurance and financial services.

     (b) "Depository institution" means a bank, savings and loan

association, savings bank, or credit union that is chartered under

state or federal law.

     (c) "Home improvement installment contract" means an agreement

consisting of 1 or more documents that covers the sale of goods or

furnishing of services to a buyer for improvements to the buyer's

principal dwelling, if that dwelling is located in this state and

used for occupancy of 4 or fewer families, under which the buyer

promises to pay in installments all or any part of the price of the

goods or services.

     (d) "Mortgage loan" means a loan or home improvement

installment contract secured by a first or subordinate mortgage or

any other form of lien or a land contract that covers real property

located in this state that is used as the borrower's principal

dwelling and is designed for occupancy by 4 or fewer families.

Mortgage loan does not include any of the following:

     (i) A loan transaction in which the proceeds are used to

acquire the borrower's principal dwelling.

     (ii) A reverse-mortgage transaction.

     (iii) An open-end credit plan. As used in this subparagraph,

"open-end credit plan" means a loan in which the lender reasonably

contemplates repeated advances.

     (iv) A loan transaction in which the proceeds are not used

primarily for a personal, family, or household purpose.

     (e) "Person" means an individual, corporation, limited

liability company, partnership, association, governmental entity,

or any other legal entity.

     (f) "Reverse-mortgage" means a nonrecourse loan under which

both of the following apply:

     (i) A mortgage or other form of lien securing 1 or more

advances is created in the borrower's principal dwelling.

     (ii) The principal, interest, or shared appreciation or equity

is payable only after the borrower dies, the dwelling is

transferred, or the borrower ceases to occupy the dwelling as a

principal dwelling.

     (g) "Regulated lender" means a depository institution; a

licensee or a registrant under the consumer financial services act,

1988 PA 161, MCL 487.2051 to 487.2072, 1984 PA 379, MCL 493.101 to

493.114, the secondary mortgage loan act, 1981 PA 125, MCL 493.51

to 493.81, or the mortgage brokers, lenders, and servicers

licensing act, 1987 PA 173, MCL 445.1651 to 445.1684; or a seller

under the home improvement finance act, 1965 PA 332, MCL 445.1101

to 445.1431.

     (h) "State and federal laws" means, individually and

collectively, 1 or more of the laws or regulations of this state or

the federal government which regulate or are applicable to a

mortgage loan or a person that is brokering, making, servicing, or

collecting a mortgage loan, including, without limitation, the

truth in lending act, 15 USC 1601 to 1667f, real estate settlement

procedures act of 1974, Public Law 93-533, 88 Stat. 1724, equal

credit opportunity act, 15 USC 1691 to 1691f, fair housing act,

title VIII of the civil rights act of 1968, Public Law 90-284, 82

Stat. 81, fair credit reporting act, 15 USC 1681 to 1681x, the

homeowners protection act of 1998, Public Law 105-216, 112 Stat.

897, the fair debt collection practices act, 15 USC 1601nt and 1692

to 1692o, Dodd-Frank Wall Street reform and consumer protection

act, Public Law 111-203, consumer financial services act, 1988 PA

161, MCL 487.2051 to 487.2072, mortgage brokers, lenders, and

servicers licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, the

secondary mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81,

1977 PA 135, MCL 445.1601 to 445.1614, and home improvement finance

act, 1965 PA 332, MCL 445.1101 to 445.1431.

     Sec. 6. (1) At Subject to subsection (2), at the time a person

applies for a mortgage loan, the lender shall provide the applicant

the following document:with a copy of the special information

booklet described in 12 CFR 1024.6, issued under the authority of

the real estate settlement procedures act of 1974, Public Law 93-

533.

     "BORROWERS BILL OF RIGHTS

     1. You have the RIGHT to shop for the best loan for you and

compare the charges of different mortgage brokers and lenders.

     2. You have the RIGHT to be informed about the total cost of

your loan including the interest rate, points, and other fees.

     3. You have the RIGHT to obtain a "Good Faith Estimate" of all

loan and settlement charges before you agree to the loan or pay any

fees.

     4. You have the RIGHT to know what fees are nonrefundable if

you decide to withdraw your loan application.

     5. You have the RIGHT to ask your mortgage broker to explain

exactly what the mortgage broker will do for you.

     6. You have the RIGHT to know how much the mortgage broker is

getting paid by you and the lender for your loan.

     7. You have the RIGHT to ask questions about charges and loan

terms that you do not understand.

     8. You have the RIGHT to a credit decision that is not based

on your race, color, religion, national origin, sex, marital

status, age, or whether any income is derived from public

assistance.

     9. You have the RIGHT to know the reason if your loan

application is turned down.

     10. You have the RIGHT to receive the HUD settlement costs

booklet "Buying Your Home"."

(2) If the federal government repeals or amends 12 CFR 1024.6

or otherwise ceases publication of the special information booklet

described in subsection (1), the department of insurance and

financial services shall prepare a document that describes the

rights of borrowers in mortgage loan transactions; annually review

the document to ensure the accuracy of any telephone numbers,

Internet website addresses, or other information included in the

document; and make the document available to lenders and the

public. If the document described in this subsection is available

to a lender under this subsection at the time a person applies for

a mortgage loan, the lender shall provide the applicant with a copy

of that document.

     Sec. 13. (1) No later than December 31, 2003, the office of

financial and insurance services The department of insurance and

financial services shall develop and make available to local units

of government, financial institutions, and other interested persons

1 or more model programs for financial education.

     (2) The program required under this section shall be designed

to teach personal financial management skills and the basic

principles involved with saving, borrowing, investing, and

protection against predatory and other fraudulent lending

practices.

     Enacting section 1. Section 7 of the consumer mortgage

protection act, 2002 PA 660, MCL 445.1637, is repealed.

     Enacting section 2. This amendatory act takes effect 90 days

after the date it is enacted into law.