From the Archives: July 2013

MCUL Engages Governorís Workgroup on Post-Foreclosure Inspection Legislation


Prior to the summer recess, the state Legislature enacted significant foreclosure process reforms. Senate Bills 380 and 383 and House Bills 4765 and 4766, backed by MCUL & Affiliates, repeal the state’s 90-day pre-foreclosure workout law upon the upcoming effective date of the new CFPB mortgage servicing regulations and provide for a new right of inspection for foreclosed properties after the sheriff sale and periodically throughout the redemption period.

If the purchaser at sale finds that damage has occurred or is imminent, they may commence an early action for summary possession of the property to take it back and extinguish any remaining redemption period. 

While the bills were enacted, the limited time frame at the end of the spring session period did not allow for several possible amendments to better define the rights of purchasers and homeowners. Some concerns from consumer groups centered on a need to provide reasonable notice of inspections or perhaps place a reasonable cap on the number of regular inspections, with exception for emergency situations where damage or imminent damage is reasonably suspected. Others suggested that simple notice to the homeowner that a sale has occurred would be appropriate, and would assist both sides in a foreclosure situation in facilitating necessary notices and communications. From the industry side, the homeowners’ right to cure damage prior to the summary possession action needs to be reworked, and stronger liability provisions against those borrowers who abandon a property without notice to the purchaser would be very beneficial.

To begin the process of addressing remaining concerns, Gov. Rick Snyder has requested that lawmakers, legislative staff and interest groups involved in the passage of the original legislation meet to discuss any necessary changes to the recently passed law, with the end goal of passing any cleanup legislation prior to the effective date of the package next January.

MCUL recently participated in the first workgroup, and is scheduled to meet with lawmakers later this week to further discuss draft language that will protect the efficacy of the new remedy provided by SB 383, while keeping an open mind toward reasonable protections that will benefit the consumer as well as the credit unions that must deal with the properties in question.

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