October 21, 2009, Introduced by Senators ANDERSON, WHITMER, CHERRY, BARCIA, CLARKE, OLSHOVE, BASHAM, SWITALSKI, HUNTER, SCOTT and BRATER and referred to the Committee on Banking and Financial Institutions.
A bill to amend 1987 PA 173, entitled
"Mortgage brokers, lenders, and servicers licensing act,"
by amending sections 22 and 31 (MCL 445.1672 and 445.1681), section
22 as amended by 2002 PA 391.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 22. (1) It is a violation of this act for a licensee or
registrant to do any of the following:
(a) Fail to conduct the business in accordance with law, this
act, or a rule promulgated or order issued under this act.
(b) Engage in fraud, deceit, or material misrepresentation in
connection with any transaction governed by this act.
(c) Intentionally or due to gross or wanton negligence,
repeatedly fail to provide borrowers material disclosures of
information as required by law.
(d) Suppress or withhold from the commissioner any information
that the licensee or registrant possesses and that, if submitted,
would have made the licensee or registrant ineligible for licensing
or registration under this act or would have warranted the
commissioner's denial of a license application or refusal to accept
a registration.
(e) Fail to comply with 1966 PA 125, MCL 565.161 to 565.164,
regulating the handling of mortgage escrow accounts by mortgagees.
(f) Until proper disbursement is made, fail to place in a
trust or escrow account held by a federally insured depository
financial institution in a manner approved by the commissioner any
money, funds, deposits, checks, drafts, or other negotiable
instruments received by the licensee that the borrower is obligated
to pay to a third party, including amounts paid to the holder of
the mortgage loan, amounts for property taxes and insurance
premiums, or amounts paid under an agreement that requires if the
mortgage loan is not closed the amounts paid shall be refunded to
the prospective borrower or if the mortgage loan is closed the
amounts paid shall be applied to fees and costs incurred at the
time the mortgage loan is closed. Fees and costs include, but are
not limited to, title insurance premiums and recording fees. Fees
and costs do not include amounts paid to cover costs incurred to
process the mortgage loan application, to obtain an appraisal, or
to receive a credit report.
(g) Refuse to permit an examination or investigation by the
commissioner of the books and affairs of the licensee or
registrant, or has refused or failed, within a reasonable time, to
furnish any information or make any report that may be required by
the commissioner under this act.
(h) To be convicted of a felony, or any misdemeanor of which
an essential element is fraud.
(i) Refuse or fail to pay, within a reasonable time, those
expenses assessed to the licensee or registrant under this act.
(j) Fail to make restitution after having been ordered to do
so by the commissioner or an administrative agency, or fail to make
restitution or pay damages to persons injured by the licensee's or
registrant's business transactions after having been ordered to do
so by a court.
(k) Fail to make a mortgage loan in accordance with a written
commitment to make a mortgage loan issued to, and accepted by, a
person when the person has timely and completely satisfied all the
conditions of the commitment before the expiration of the
commitment.
(l) Require a prospective borrower to deal exclusively with the
licensee or registrant in regard to a mortgage loan application.
(m) Take a security interest in real property before closing
the mortgage loan to secure payment of fees assessed in connection
with a mortgage loan application.
(n) Except as provided under section 18e, knowingly permit a
person to violate an order that has been issued under this act or
any other financial licensing act that prohibits that person from
being employed by, an agent of, or a control person of the licensee
or registrant.
(o) Fail to disclose to each mortgage loan applicant, at the
time the person applies for a mortgage loan, whether the licensee
or registrant may assign, sell, or transfer the servicing of the
mortgage loan at any time while the mortgage loan is outstanding.
(p) Fail to notify a borrower of any assignment, sale, or
other transfer of the servicing of the borrower's mortgage loan by
the licensee or registrant, by providing written notice that meets
all of the following:
(i) Except as provided in subparagraph (ii) or subsection (2),
is delivered to the borrower at least 15 days before the effective
date of the transfer of the servicing of the mortgage loan.
(ii) Except as provided in subsection (2), is delivered to the
borrower not more than 30 days after the effective date of the
transfer of the servicing of the mortgage loan if the transfer is
the result of any of the following:
(A) Termination of the contract for servicing the mortgage
loan for cause.
(B) Commencement of bankruptcy proceedings by or against the
licensee or registrant servicing the mortgage loan.
(C) Commencement by the commissioner of conservatorship
proceedings under section 32 against the licensee or registrant
servicing the mortgage loan before the transfer.
(iii) Includes all of the following information:
(A) The effective date of transfer of the servicing.
(B) The name, address, and a toll-free or collect-call
telephone number of the transferee of the servicing.
(C) A name of and a toll-free or collect-call telephone number
for an employee or a department of the licensee or registrant that
is the transferor of the servicing that the borrower may contact to
ask questions or obtain information relating to the transfer of the
servicing of the borrower's mortgage loan.
(D) The name of and a toll-free or collect-call telephone
number for an employee or a department of the person that is the
transferee of the servicing that the borrower may contact to ask
questions or obtain information relating to the transfer of the
servicing of the borrower's mortgage loan.
(E) The date on which the licensee or registrant that is
servicing the mortgage loan before the transfer will cease to
accept payments relating to the mortgage loan and the date on which
the transferee will begin to accept those payments.
(F) Any information concerning the effect the transfer may
have, if any, on the terms of or the continued availability of
mortgage life or disability insurance or any other type of optional
insurance and what action, if any, the borrower must take to
maintain coverage.
(G) A statement that the transfer of the servicing of the
mortgage loan does not affect any term or condition of the
borrower's mortgage or any other security instruments executed by
the borrower in connection with the mortgage loan, other than terms
directly related to the servicing of the mortgage loan.
(q) Fail to notify a borrower of any assignment, sale, or
other transfer of the servicing of the borrower's mortgage loan to
a licensee or registrant, by providing written notice that meets
all of the following:
(i) Except as provided in subparagraph (ii) or subsection (2),
is delivered to the borrower at least 15 days after the effective
date of the transfer of the servicing of the mortgage loan.
(ii) Except as provided in subsection (2), is delivered to the
borrower not more than 30 days after the effective date of the
transfer of the servicing of the mortgage loan if the transfer is
the result of any of the following:
(A) Termination of the contract for servicing the mortgage
loan for cause.
(B) Commencement of bankruptcy proceedings by or against the
licensee or registrant servicing the loan.
(C) Commencement by the commissioner of conservatorship
proceedings under section 32 against the licensee or registrant
servicing the mortgage loan after the transfer.
(iii) Includes all of the following information:
(A) The effective date of transfer of the servicing.
(B) The name, address, and a toll-free or collect-call
telephone number of the transferor of the servicing.
(C) A name of and a toll-free or collect-call telephone number
for an employee or a department of the licensee or registrant that
is the transferee of the servicing that the borrower may contact to
ask questions or obtain information relating to the transfer of the
servicing of the borrower's mortgage loan.
(D) The name of and a toll-free or collect-call telephone
number for an employee or a department of the person that is the
transferor of the servicing that the borrower may contact to ask
questions or obtain information relating to the transfer of the
servicing of the borrower's mortgage loan.
(E) The date on which the person that was servicing the
mortgage loan before the transfer will cease to accept payments
relating to the mortgage loan and the date on which the licensee or
registrant will begin to accept those payments.
(F) Any information concerning the effect the transfer may
have, if any, on the terms of or the continued availability of
mortgage life or disability insurance or any other type of
optional insurance and what action, if any, the borrower must
take to maintain coverage.
(G) A statement that the transfer of the servicing of the
mortgage loan to the licensee or registrant does not affect any
term or condition of the borrower's mortgage or any other security
instruments executed by the borrower in connection with the
mortgage loan, other than terms directly related to the servicing
of the mortgage loan.
(2) Subsection (1)(p)(i) and (ii) does not apply to any
assignment, sale, or other transfer of the servicing of a mortgage
loan if the licensee or registrant making the mortgage loan
provides written notice of the transfer to the borrower at the
closing of the mortgage loan that meets the requirements of
subsection (1)(p)(iii). Subsection (1)(q)(i) and (ii) does not apply to
any assignment, sale, or other transfer of the servicing of a
mortgage loan to a licensee or registrant if the person making the
mortgage loan provides written notice of the transfer to the
borrower at the closing of the mortgage loan that meets the
requirements of subsection (1)(q)(iii).
Sec. 31. (1) Whether or not a person seeks damages or has an
adequate remedy at law, any person, prosecutor, or the attorney
general may bring an action, including a class action, to do any of
the following:
(a) Obtain a declaratory judgment that a method, act, or
practice is a violation of this act.
(b) Obtain an injunction against a person who is engaging in
or is about to engage in a method, act, or practice that violates
this act.
(c) Except as limited by subsection (2), recover actual
damages resulting from a violation of this act, other than a
violation of section 22(1)(o), (p), or (q), or $250.00, whichever
is greater, together with reasonable attorney fees and the costs of
bringing the action.
(d) Recover actual damages resulting from a violation of
section 22(1)(o), (p), or (q), or $1,500.00, whichever is greater,
together with reasonable attorney fees and the costs of bringing
the action.
(2) If the licensee or registrant establishes by a
preponderance of the evidence that the failure to comply with the
act was not willful, intentional, or the result of gross or wanton
negligence, the amount recovered pursuant to subsection (1)(c)
shall not exceed actual damages.
Enacting section 1. This amendatory act takes effect July 31,
2010.