HB 5446 Summary

• Establishes the "Nonrecourse Mortgage Loan Act" to regulate loan covenants in nonrecourse commercial loans secured by Michigan real property.

• Defines "nonrecourse loan" as a commercial mortgage loan where the lender cannot seek a money judgment against the borrower beyond the mortgaged property and collateral, including loans with no deficiency judgments or personal recourse provisions.

• Prohibits "post closing solvency covenants" (provisions requiring borrowers to maintain adequate capital or ability to pay debts after loan funding) from being used as exceptions to nonrecourse protections or as basis for claims against borrowers, guarantors, or sureties.

• Declares post closing solvency covenants used as nonrecourse exceptions invalid, unenforceable, and unfair business practices contrary to public policy.

• Applies retroactively to all nonrecourse loans existing on or after the effective date, including pending claims and actions, unless a final judgment with exhausted appeal rights has already been entered.