MI HB6340

Authority must provide written notice to borrowers before foreclosing mortgages on principal residences exempt from property tax, including default reasons, amounts due, contact information, and designation of a person authorized to negotiate modifications.

Borrowers may request a meeting with designated authority representative within 14 days of notice and may have a housing counselor attend; foreclosure proceedings are stayed for 90 days if a meeting is requested.

Authority must evaluate borrowers for loan modifications using a program that targets a housing debt-to-income ratio of 38% or less, achieved through interest rate reduction (minimum 3% floor, 5-year fixed term), extended amortization (up to 40 years), principal deferral (20% or less), or fee reduction.

If borrower qualifies for modification but parties do not agree, foreclosure must proceed judicially rather than by advertisement; borrower may file suit to convert advertisement foreclosure to judicial foreclosure if authority violates procedures.

Sections 49w through 49aa expire and are repealed effective July 5, 2011.