October 21, 2009, Introduced by Senators WHITMER, ANDERSON, CHERRY, OLSHOVE, BARCIA, CLARKE, BASHAM, SWITALSKI, HUNTER, SCOTT and BRATER and referred to the Committee on Banking and Financial Institutions.
A bill to create the foreclosure protection act; to regulate
certain mortgage foreclosure consultants, foreclosure consulting
contracts, equity purchasers, and equity purchase contracts; and to
provide penalties and remedies for violations of that act.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"foreclosure protection act".
Sec. 2. (1) As used in this act:
(a) "Associate" means a partner, a subsidiary, an affiliate,
an agent, or any other person working in association with a
foreclosure consultant or an equity purchaser. Associate does not
include a person that is excluded from the definition of an equity
purchaser or a foreclosure consultant.
(b) "Equity purchase contract" means an agreement between an
equity purchaser and a homeowner concerning the acquisition of
title to the homeowner's personal residence.
(c) "Equity purchaser" means a person that acquires title to a
residence in foreclosure in the course of the person's business,
vocation, or occupation. Equity purchaser does not include a person
that acquires that title for the purpose of using the residence as
his or her personal residence for at least 1 year or a person that
acquires that title in a manner that meets any of the following:
(i) By a deed in lieu of foreclosure to the holder of an
evidence of debt or an associate of the holder of an evidence of
debt or the holder of a consensual lien or encumbrance of record
that is recorded before the foreclosure sale in the register of
deeds office of the county where the residence in foreclosure is
located.
(ii) By a deed from any trustee, sheriff, or other person
appointed by a court as a result of a foreclosure sale.
(iii) At a sale of property authorized by statute.
(iv) By order or judgment of any court.
(v) From the person's spouse or relative, from a relative of
the person's spouse, or from a guardian, conservator, or personal
representative of any of those individuals.
(vi) While performing services as a part of a person's normal
business activities under any law of this state or the United
States that regulates financial institutions, an affiliate or
subsidiary of any of the financial institutions, or an employee or
agent acting on behalf of any of the financial institutions.
(d) "Evidence of debt" means a writing that evidences a
promise to pay or a right to the payment of a monetary obligation,
including, but not limited to, a promissory note; bond; negotiable
instrument; loan, credit, or similar agreement; or monetary
judgment entered by a court of competent jurisdiction.
(e) "Financial institutions" means banks, trust companies,
savings and loan associations, credit unions, insurance companies,
title insurers, insurance producers, or escrow companies authorized
to conduct business in this state.
(f) Subject to subsection (2), "foreclosure consultant" means
a person that meets both of the following:
(i) Does not, directly or through an associate, take or acquire
any interest in or title to a residence in foreclosure.
(ii) In the course of the person's business, vocation, or
occupation, makes a solicitation, representation, or offer to a
homeowner to perform, in exchange for compensation from the
homeowner or from the proceeds of any loan or advance of funds, a
service that the person represents will do any of the following:
(A) Stop or postpone a foreclosure sale.
(B) Obtain a forbearance from a beneficiary under a deed of
trust, mortgage, or other lien.
(C) Assist the homeowner in exercising a right to cure a
default.
(D) Obtain an extension of the period within which the
homeowner may cure a default.
(E) Obtain a waiver of an acceleration clause contained in an
evidence of debt secured by a deed of trust, mortgage, or other
lien on a residence in foreclosure or contained in that deed of
trust, mortgage, or other lien.
(F) Assist the homeowner to obtain a loan or an advance of
funds.
(G) Avoid or reduce the impairment of the homeowner's credit
resulting from the recording of a notice of election and demand for
sale, commencement of a judicial foreclosure action, or due to any
foreclosure sale or the granting of a deed in lieu of foreclosure
or resulting from any late payment or other failure to pay or
perform under the evidence of debt, the deed of trust, or other
lien securing that evidence of debt.
(H) In any way delay, hinder, or prevent the foreclosure of
the homeowner's residence.
(I) Assist the homeowner in obtaining from the beneficiary,
mortgagee, or grantee of the lien in foreclosure, or from counsel
for that beneficiary, mortgagee, or grantee, the remaining or
excess proceeds from the foreclosure sale of the residence in
foreclosure.
(g) "Foreclosure consulting contract" means any agreement
between a foreclosure consultant and a homeowner.
(h) "Holder of evidence of debt" means the person in actual
possession of or otherwise entitled to enforce an evidence of debt,
except that holder of evidence of debt does not include a person
acting as a nominee solely for the purpose of holding the evidence
of debt or deed of trust as an electronic registry without any
authority to enforce the evidence of debt or deed of trust. Each of
the following persons is presumed to be the holder of evidence of
debt:
(i) The person who is the obligee of and who is in possession
of an original evidence of debt.
(ii) The person in possession of an original evidence of debt
and a proper endorsement or assignment of that evidence of debt to
that person.
(iii) The person in possession of a negotiable instrument
evidencing a debt that has been duly negotiated to that person or
to bearer or indorsed in blank.
(iv) The person in possession of an evidence of debt with
authority, which may be granted by the original evidence of debt or
deed of trust, to enforce the evidence of debt as an agent, a
nominee, or a trustee or in a similar capacity for the obligee of
the evidence of debt.
(i) "Homeowner" means the owner of a residence in foreclosure,
including a vendee under a land contract.
(j) "Residence in foreclosure" means a residence or dwelling
that is occupied as the homeowner's principal place of residence
and against which any type of foreclosure action, including, but
not limited to, the filing of a notice of default of a deed of
trust or the filing of a lawsuit to foreclose a mortgage or other
lien, has been commenced.
(2) Foreclosure consultant does not include any of the
following:
(a) An individual licensed to practice law in this state while
performing any activity related to the individual's attorney-client
relationship with a homeowner or any activity related to the
individual's attorney-client relationship with the beneficiary,
mortgagee, grantee, or holder of any lien being enforced by way of
foreclosure.
(b) A holder or servicer of an evidence of debt or the
attorney for the holder or servicer of an evidence of debt secured
by a deed of trust or other lien on any residence in foreclosure
while the person performs services in connection with the evidence
of debt, lien, deed of trust, or other lien securing that debt.
(c) A person doing business under any law of this state or the
United States that regulates financial institutions, while the
person performs services as part of the person's normal business
activities, an affiliate or subsidiary of any of the financial
institutions, or an employee or agent acting on behalf of any of
the financial institutions.
(d) A person originating or closing a loan in a person's
normal course of business if either of the following applies to
that loan:
(i) The loan is subject to the requirements of the real estate
settlement procedures act of 1974, 12 USC 1730f, 1831b, and 2601 to
2617.
(ii) With respect to a junior mortgage or home equity line of
credit, the loan is subordinate to and closed simultaneously with a
qualified first mortgage loan under subparagraph (i) or is initially
payable on the face of the note or contract to an entity described
in subdivision (c).
(e) A judgment creditor of the homeowner.
(f) A title insurance company or title insurance agent
authorized to conduct business in this state while performing title
insurance and settlement services.
(g) A person licensed as a real estate broker, associate
broker, or real estate salesperson in this state while the person
engages in any activity for which the person is licensed.
(h) A nonprofit organization that solely offers counseling or
advice to homeowners in foreclosure or loan default, unless the
organization is an associate of the foreclosure consultant.
Sec. 3. (1) A foreclosure consulting contract shall be in
writing and provided to and retained by the homeowner, with
changes, alterations, or modifications, for review at least 24
hours before it is signed by the homeowner.
(2) A foreclosure consulting contract shall be printed in at
least 12-point type and shall include the name, address, facsimile
number, and electronic mail address of the foreclosure consultant
to which a notice of cancellation may be delivered and the date the
homeowner signed the contract.
(3) A foreclosure consulting contract shall fully disclose the
exact nature of the foreclosure consulting services to be provided
and the total amount and terms of any compensation to be received
by the foreclosure consultant or associate.
(4) A foreclosure consulting contract shall be dated and
personally signed, with each page being initialed by each homeowner
of the residence in foreclosure and the foreclosure consultant, and
shall be acknowledged by a notary public in the presence of the
homeowner at the time the contract is signed by the homeowner.
(5) A foreclosure consulting contract shall contain the
following notice, printed in at least 14-point, boldfaced type,
completed with the name of the foreclosure consultant, and located
in immediate proximity to the space reserved for the homeowner's
signature:
NOTICE REQUIRED BY MICHIGAN LAW
_______________ (NAME OF FORECLOSURE CONSULTANT) OR (HIS/HER/ITS)
ASSOCIATE CANNOT ASK YOU TO SIGN OR HAVE YOU SIGN ANY DOCUMENT THAT
TRANSFERS ANY INTEREST IN YOUR HOME OR PROPERTY TO (HIM/HER/IT) OR
(HIS/HER/ITS) ASSOCIATE.
_______________ (NAME OF FORECLOSURE CONSULTANT) OR (HIS/HER/ITS)
ASSOCIATE CANNOT GUARANTEE YOU THAT THEY WILL BE ABLE TO REFINANCE
YOUR HOME OR ARRANGE FOR YOU TO KEEP YOUR HOME. YOU MAY, AT ANY
TIME, CANCEL THIS CONTRACT, WITHOUT PENALTY OF ANY KIND.
IF YOU WANT TO CANCEL THIS CONTRACT, MAIL OR DELIVER A SIGNED AND
DATED COPY OF THIS NOTICE OF CANCELLATION, OR ANY OTHER
WRITTEN NOTICE, INDICATING YOUR INTENT TO CANCEL TO _______________
(NAME OF FORECLOSURE CONSULTANT) AT _______________ (ADDRESS OF
FORECLOSURE CONSULTANT, INCLUDING FACSIMILE NUMBER AND ELECTRONIC
MAIL ADDRESS).
AS PART OF ANY CANCELLATION, YOU (THE HOMEOWNER) MUST REPAY
ANY MONEY ACTUALLY SPENT ON YOUR BEHALF BY _______________ (NAME OF
FORECLOSURE CONSULTANT) PRIOR TO RECEIPT OF THIS NOTICE AND, AS A
RESULT OF THIS AGREEMENT, WITHIN 60 DAYS, ALONG WITH INTEREST AT
THE PRIME RATE PUBLISHED BY THE FEDERAL RESERVE BOARD PLUS 2
PERCENTAGE POINTS, WITH THE TOTAL INTEREST RATE NOT TO EXCEED 8
PERCENT PER YEAR.
THIS IS AN IMPORTANT LEGAL CONTRACT AND COULD RESULT IN THE LOSS OF
YOUR HOME. CONTACT AN ATTORNEY OR A HOUSING COUNSELOR APPROVED BY
THE FEDERAL DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT BEFORE
SIGNING.
(6) A completed form in duplicate, captioned NOTICE OF
CANCELLATION, shall accompany a foreclosure consulting contract.
The notice of cancellation shall meet all of the following:
(a) Be on a separate sheet of paper attached to the contract.
(b) Be easily detachable.
(c) Contain the following statement, printed in at least 14-
point type:
NOTICE OF CANCELLATION
_______________ (DATE OF CONTRACT)
TO: (NAME OF FORECLOSURE CONSULTANT)
(ADDRESS OF FORECLOSURE CONSULTANT, INCLUDING FACSIMILE NUMBER AND
ELECTRONIC MAIL ADDRESS)
I HEREBY CANCEL THIS CONTRACT.
_______________ (DATE)
_______________ (HOMEOWNER'S SIGNATURE)
(7) A foreclosure consultant shall provide to the homeowner a
signed, dated, and acknowledged copy of the foreclosure consulting
contract and the attached notice of cancellation immediately upon
execution of the contract.
(8) The time during which the homeowner may cancel a
foreclosure consulting contract does not begin to run until the
foreclosure consultant has complied with this section.
Sec. 4. (1) In addition to any right of rescission available
under state or federal law, a homeowner has the right to cancel a
foreclosure consulting contract at any time. For purposes of this
section, cancellation of a foreclosure consulting contract occurs
when a homeowner gives written notice of cancellation of the
foreclosure consulting contract to the foreclosure consultant at
the address specified in the contract or through any facsimile
number or electronic mail address identified in the contract or
other materials provided to the homeowner by the foreclosure
consultant.
(2) If given by mail, notice of cancellation of a foreclosure
consulting contract is effective when deposited in the United
States mail, properly addressed, with postage prepaid. A notice of
cancellation may be in a form other than the form provided for in
the contract and is effective, however expressed, if it indicates
the intention of the homeowner to cancel the foreclosure consulting
contract.
(3) As part of the cancellation of a foreclosure consulting
contract, the homeowner shall within 60 days after the date of
cancellation repay all funds paid or advanced in good faith before
the receipt of notice of cancellation by the foreclosure consultant
or his or her associate under the terms of the foreclosure
consulting contract, together with interest at the prime rate
published by the federal reserve board plus 2 percentage points, or
8% per year, whichever is lower, from the date of expenditure until
repaid by the homeowner.
(4) Except as provided in subsection (3), the right to cancel
a foreclosure consulting contract shall not be conditioned on the
repayment of any money.
Sec. 5. A provision in a foreclosure consulting contract is
void as against public policy if the provision attempts or purports
to do any of the following:
(a) Waive any of the rights specified in sections 3 to 8 or
the right to a jury trial.
(b) Consent to jurisdiction for litigation or choice of law in
a state other than this state.
(c) Consent to venue in a county other than the county in
which the residence in foreclosure is located.
(d) Impose any costs or fees greater than the actual costs and
fees.
Sec. 6. A foreclosure consultant shall not do any of the
following:
(a) Claim, demand, charge, collect, or receive any
compensation until after the foreclosure consultant has fully
performed each and every service the foreclosure consulting
contracted to perform or represented that the foreclosure
consultant would perform.
(b) Claim, demand, charge, collect, or receive any interest or
any other compensation for a loan that the foreclosure consultant
makes to the homeowner that exceeds the prime rate published by the
federal reserve board at the time of any loan plus 2 percentage
points, or 8% per year, whichever is lower.
(c) Take a wage assignment, a lien of any type on real or
personal property, or any other security to secure the payment of
compensation.
(d) Receive any consideration from a third party in connection
with foreclosure consulting services provided to a homeowner unless
the consideration is first fully disclosed in writing to the
homeowner.
(e) Acquire an interest, directly, indirectly, or through an
associate, in the real or personal property of a homeowner with
whom the foreclosure consultant has contracted.
(f) Obtain a power of attorney from a homeowner for any
purpose other than to inspect documents as provided by law.
(g) Induce or attempt to induce a homeowner to enter into a
foreclosure consulting contract that does not comply in all
respects with sections 3 to 8.
Sec. 7. A foreclosure consultant or associate may not
facilitate or engage in any transaction that is unconscionable
under the terms and circumstances of the transaction. All of the
following apply concerning whether a transaction is unconscionable:
(a) If a court, as a matter of law, finds a foreclosure
consulting contract or any clause of a foreclosure consulting
contract was unconscionable at the time it was made, the court may
refuse to enforce the contract, enforce the remainder of the
contract without the unconscionable clause, or limit the
application of any unconscionable clause so as to avoid an
unconscionable result.
(b) If it is claimed or appears to a court that a foreclosure
consulting contract or any clause of a foreclosure consulting
contract may be unconscionable, the parties shall be afforded a
reasonable opportunity to present evidence as to its commercial
setting, purpose, and effect to aid the court in making the
determination.
(c) In order to support a finding of unconscionability, there
must be evidence of an unreasonable inequality of bargaining power
or other circumstances in which there is an absence of meaningful
choice for 1 of the parties, together with contract terms that are
unreasonably favorable to the foreclosure consultant or associate
under standard industry practices.
Sec. 8. A foreclosure consulting contract, and all notices of
cancellation provided for in the contract, shall be written in
English and shall be accompanied by a written translation from
English into any other language principally spoken by the
homeowner, certified by the person making the translation as a true
and correct translation of the English version. The translated
version is presumed to have equal status and credibility as the
English version.
Sec. 9. An equity purchase contract shall be written in at
least 12-point, boldfaced type and fully completed, signed, and
dated by the homeowner and equity purchaser before the execution of
any instrument quitclaiming, assigning, transferring, conveying, or
encumbering an interest in the residence in foreclosure.
Sec. 10. (1) An equity purchase contract shall contain the
entire agreement of the parties and shall include at least all of
the following:
(a) The name, business address, telephone number, facsimile
number, and electronic mail address of the equity purchaser.
(b) The street address and full legal description of the
residence in foreclosure.
(c) Clear and conspicuous disclosure of any financial or legal
obligations of the homeowner that will be assumed by the equity
purchaser. If the equity purchaser will not be assuming any
financial or legal obligations of the homeowner, the equity
purchase contract shall so state.
(d) The total consideration to be paid by the equity purchaser
in connection with or incident to the acquisition by the equity
purchaser of the residence in foreclosure.
(e) The terms of payment or other consideration, including,
but not limited to, any services of any nature that the equity
purchaser represents will be performed for the homeowner before or
after the sale.
(f) The date and time when possession of the residence in
foreclosure is to be transferred to the equity purchaser.
(g) The terms of any rental agreement or lease.
(h) The specifications of any option or right to repurchase
the residence in foreclosure, including the specific amounts of any
escrow deposit, down payment, purchase price, closing costs,
commissions, or other fees or costs.
(i) A notice of cancellation as provided in section 12.
(j) The following notice, in at least 14-point, boldfaced
type, completed with the name of the equity purchaser, immediately
above the statement required by section 12:
NOTICE REQUIRED BY MICHIGAN LAW
UNTIL YOUR RIGHT TO CANCEL THIS CONTRACT HAS ENDED,
____________________(NAME) OR ANYONE WORKING FOR
____________________(NAME) CANNOT ASK YOU TO SIGN OR HAVE YOU SIGN
ANY DEED OR ANY OTHER DOCUMENT.
(2) An equity purchase contract required under this section
survives delivery of any instrument of conveyance of the residence
in foreclosure, but does not have any effect on persons other than
the parties to the contract or affect title to the residence in
foreclosure.
Sec. 11. (1) In addition to any right of rescission available
under state or federal law, a homeowner has the right to cancel an
equity purchase contract until 12 midnight of the third business
day following the day on which the homeowner signs a contract that
complies with this act or until 12 noon on the day before the
foreclosure sale of the residence in foreclosure, whichever occurs
first.
(2) For purposes of this section, cancellation of an equity
purchase contract occurs when a homeowner personally delivers
written notice of cancellation to the address specified in the
equity purchase contract or upon deposit of that notice in the
United States mail, properly addressed, with postage prepaid. A
notice of cancellation may be in a form other than the form
provided for in the contract and is effective, however expressed,
if it indicates the intention of the homeowner to cancel the equity
purchase contract.
(3) In the absence of any written notice of cancellation from
a homeowner, the execution by the homeowner of a deed or other
instrument of conveyance of an interest in the residence in
foreclosure to the equity purchaser after the expiration of any
applicable rescission period creates a rebuttable presumption that
the homeowner did not cancel the equity purchase contract.
Sec. 12. (1) An equity purchase contract shall contain, as the
last provision before the space reserved for the homeowner's
signature, a conspicuous statement in at least 12-point, boldfaced
type, that states as follows:
YOU MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE WITHOUT ANY
PENALTY OR OBLIGATION AT ANY TIME BEFORE _______________ (DATE AND
TIME OF DAY). SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN
EXPLANATION OF THIS RIGHT.
(2) An equity purchaser shall accurately specify in an equity
purchase contract the date and time of day on which the homeowner's
cancellation right ends.
(3) An equity purchase contract shall be accompanied by
duplicate completed forms, captioned "Notice of Cancellation", in
at least 12-point, boldfaced type if the equity purchase contract
is printed or in capital letters if the equity purchase contract is
typed, followed by a space in which the equity purchaser shall
enter the date on which the homeowner executed the equity purchase
contract. The form shall meet all of the following:
(a) Be attached to the equity purchase contract.
(b) Be easily detachable.
(c) Contain the following statement, in at least 10-point type
if the equity purchase contract is printed or in capital letters if
the contract is typed:
NOTICE OF CANCELLATION
_______________ (ENTER DATE EQUITY PURCHASE CONTRACT SIGNED). YOU
MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE, WITHOUT ANY
PENALTY OR OBLIGATION, AT ANY TIME BEFORE _______________ (ENTER
DATE AND TIME OF DAY). TO CANCEL THIS TRANSACTION, PERSONALLY
DELIVER A SIGNED AND DATED COPY OF THIS NOTICE OF CANCELLATION IN
THE UNITED STATES MAIL, POSTAGE PREPAID, TO _______________, (NAME
OF PURCHASER) AT _______________ (STREET ADDRESS OF PURCHASER'S
PLACE OF BUSINESS) NOT LATER THAN _______________ (ENTER DATE AND
TIME OF DAY).
I HEREBY CANCEL THIS TRANSACTION _______________ (DATE)
_______________ (SELLER'S SIGNATURE).
(4) An equity purchaser shall provide the homeowner with a
copy of the equity purchase contract and the attached notice of
cancellation.
(5) The time during which the homeowner may cancel an equity
purchase contract does not begin to run until the equity purchaser
has complied with this section.
Sec. 13. (1) A transaction in which a homeowner purports to
grant a residence in foreclosure to an equity purchaser by an
instrument that appears to be an absolute conveyance and in which
an option to repurchase is reserved to the homeowner or is given by
the equity purchaser to the homeowner is permitted only if all of
the following conditions have been met:
(a) The reconveyance contract complies in all respects with
section 10.
(b) The reconveyance contract provides the homeowner with a
nonwaivable, 30-day right to cure any default of the reconveyance
contract and specifies that the homeowner may exercise this right
to cure on at least 3 separate occasions during the term of the
reconveyance contract.
(c) The equity purchaser fully assumes or discharges the lien
in foreclosure as well as any prior liens that will not be
extinguished by the foreclosure, and the assumption or discharge is
accomplished without a violation of the terms and conditions of the
liens being assumed or discharged.
(d) The equity purchaser verifies and can demonstrate that the
homeowner has or will have a reasonable ability to make the lease
payments and to repurchase the residence in foreclosure within the
term of the option to repurchase under the reconveyance contract.
(2) For purposes of this section, there is a rebuttable
presumption that the homeowner has a reasonable ability to make
lease payments and to repurchase the residence in foreclosure if
the homeowner's payments for primary housing expenses and regular
principal and interest payments on other personal debt do not
exceed 60% of the homeowner's monthly gross income; and that the
price the homeowner must pay to exercise the option to repurchase
the residence in foreclosure is not unconscionable. Without
limiting any claim available under section 16, a repurchase price
exceeding 25% of the price for which the equity purchaser acquired
the residence in foreclosure creates a rebuttable presumption that
the reconveyance contract is unconscionable. The acquisition price
paid by the equity purchaser may include any actual costs incurred
by the equity purchaser in acquiring the residence in foreclosure.
Sec. 14. A provision in an equity purchase contract between an
equity purchaser and a homeowner is void as against public policy
if it attempts or purports to do any of the following:
(a) Waive any of the rights specified in sections 9 to 17 of
this act or the right to a jury trial.
(b) Consent to jurisdiction for litigation or choice of law in
a state other than this state.
(c) Consent to venue in a county other than the county in
which the residence in foreclosure is located.
(d) Impose any costs or fees greater than the actual costs and
fees.
Sec. 15. (1) The equity purchase contract provisions required
under sections 9 to 14 shall be provided and completed in
conformity with those sections by the equity purchaser.
(2) Until the time within which the homeowner may cancel the
transaction has fully elapsed, an equity purchaser shall not do any
of the following:
(a) Accept from a homeowner an execution of, or induce a
homeowner to execute, an instrument of conveyance of any interest
in the residence in foreclosure.
(b) Record with the register of deeds any document, including,
but not limited to, the equity purchase contract, or any lease,
lien, or instrument of conveyance signed by the homeowner.
(c) Transfer or encumber or purport to transfer or encumber an
interest in the residence in foreclosure to a third party.
(d) Pay the homeowner any consideration.
(3) Within 10 days following receipt of a notice of
cancellation given under sections 11 and 12, the equity purchaser
shall return without condition the original equity purchase
contract and any other documents signed by the homeowner.
(4) An equity purchaser shall not make any untrue or
misleading statements of material fact regarding the value of the
residence in foreclosure, the amount of proceeds the homeowner will
receive after a foreclosure sale, any equity purchase contract
term, the homeowner's rights or obligations incident to or arising
out of the sale transaction, or the nature of any document that the
equity purchaser induces the homeowner to sign or any other untrue
or misleading statement concerning the sale of the residence in
foreclosure to the equity purchaser.
Sec. 16. An equity purchaser or associate may not facilitate
or engage in any transaction that is unconscionable under the terms
and circumstances of the transaction. All of the following apply
concerning whether a transaction is unconscionable:
(a) If a court, as a matter of law, finds an equity purchase
contract or any clause of that contract to have been unconscionable
at the time it was made, the court may refuse to enforce the equity
purchase contract, enforce the remainder of the equity purchase
contract without the unconscionable clause, or limit the
application of any unconscionable clause so as to avoid an
unconscionable result.
(b) If it is claimed or appears to the court that the contract
or any clause of the contract may be unconscionable, the parties
shall be afforded a reasonable opportunity to present evidence as
to its commercial setting, purpose, and effect to aid the court in
making the determination.
(c) In order to support a finding of unconscionability, there
must be evidence of some bad faith overreaching on the part of the
equity purchaser or associate such as that which results from an
unreasonable inequality of bargaining power or under other
circumstances in which there is an absence of meaningful choice for
1 of the parties, together with contract terms that are
unreasonably favorable to the equity purchaser or associate under
standard industry practices.
Sec. 17. Any equity purchase contract, rental agreement,
lease, option or right to repurchase and any notice, conveyance,
lien, encumbrance, consent, or other document or instrument signed
by a homeowner shall be written in English and shall be accompanied
by a written translation from English into any other language
principally spoken by the homeowner, certified by the person making
the translation as a true and correct translation of the English
version. The translated version shall be presumed to have equal
status and credibility as the English version.
Sec. 18. (1) Except as provided in subsection (2), the
attorney general, a county prosecutor, or a homeowner may bring an
action to do 1 or more of the following:
(a) Enjoin a person who is engaged or is about to engage in a
method, act, or practice that violates this act.
(b) Obtain a declaratory judgment that a method, act, or
practice violates this act.
(c) Recover actual damages consisting of an amount not less
than the amount paid by the homeowner to the foreclosure consultant
or equity purchaser, plus reasonable attorney fees and court costs.
The court may also award the buyer any punitive damages that it
considers proper.
(2) A person shall not bring an action under this section more
than 4 years after the date of execution of the foreclosure
consulting contract or equity purchase contract to which the action
relates.
(3) In an action under this act, the burden of proving that a
person is not a foreclosure consultant or equity purchaser is on
that person.
(4) This section does not limit or prohibit any other legal
remedy available to the attorney general, a county prosecutor, or a
homeowner.
Sec. 19. A person that violates any provision of this act is
guilty of a felony punishable by imprisonment for not more than 1
year or a fine of not more than $15,000.00, or both.