Bulletin: MI2014001

Date:
June 17, 2014
To:
All Michigan Issuing Offices
RE:
UNDERWRITING - Public Act 125 of 2014/ Mortgage Foreclosure by Advertisement Provisions

Dear Associates:

Please be advised that on May 20, 2014, the Governor of Michigan signed into law Public Act 125 of 2014, which will become effective on June 19, 2014. [Copy attached.] This Act amends the advertisement mortgage foreclosure act (MCL 600.3200 et seq.) in two significant ways.

First, the Act sets out a procedure to enable the bidder at Sheriff’s sale to conduct an interior inspection of the property during the redemption period following the sale to assess the premises for possible damage and waste. Newly created Sections 3237 and 3238 identify certain notice procedures that the foreclosing lender must follow to initiate their right of inspection. The Act also contemplates that, after inspection, the bidder has the right to initiate summary proceedings for possession to prevent imminent, or further, waste. Such action necessitates further notice requirements under the Act to advise the property owner/parties in interest of the intent to acquire possession. It is significant to note that successful completion of a summary proceeding for possession extinguishes any further right of redemption of the borrower and all parties named in the proceeding. [See Section 3248 (10).] To eliminate the right of redemption by other parties claiming by or through the borrower (ex. junior lien claimants) those parties must also be named party defendants in the proceedings.

Secondly, the Act repeals Sections 3205, 3205e and 3206 which, when combined with the prior repeals of Sections 3205a - d (effective June 30, 2013), functionally eliminates the mortgage "mitigation" procedures previously imposed upon lenders to negotiate a modification of the terms of the loan with the defaulted borrower(s).

As a result of the above, starting June 19, 2014, when issuing mortgage foreclosure commitments or Mortgage Foreclosure Guarantees it is no longer necessary to require the submission of satisfactory evidence that the foreclosing lender satisfied the provisions of MCL 600.3204(4), MCL 600.3205, MCL 600.3205a-e or the provisions of MCL 600.3206.

In the event that you are requested to insure the REO sale out from the bidder at Sheriff’s sale based upon a summary proceeding to acquire possession prior to the expiration of the statutory redemption period, you must do an examination of title/name search to identify parties claiming by or through the borrower to determine that all parties’ rights of redemption were eliminated. Remember that there will be a 21-day appeal period before the Order of Possession would be final.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
MI2009002 Mortgage Foreclosure Procedures
 
MI2009008 Mortgage Foreclosures - Condominium Association Liens
 
MI2012003 Mortgage Foreclosure by Advertisement/ Assignments Chain of Title
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None