Financial institutions: mortgage brokers and lenders; prohibition on certain mortgage lending practices; modify. Amends title & secs. 1 & 2 of 1977 PA 135 (MCL 445.1601 & 445.1602).
Summary
HB5497 amends Michigan’s mortgage lending anti-discrimination law, 1977 PA 135, to update terminology, definitions, and lending standards for mortgage loans and home improvement loans. The bill revises references to the state financial regulator, clarifies the definition of a credit granting institution, and updates the title to reflect current state agencies and officials. It also keeps in place the core prohibition on denying or varying loan terms based on racial or ethnic characteristics in a neighborhood or the age of nearby structures, while allowing lenders to consider the physical condition and remaining useful life of the property.
The bill also changes several operational requirements for lenders. It raises the minimum loan amounts that institutions may impose for mortgage loans and home improvement loans, phases those increases in over time, and requires future adjustments for inflation beginning in 2032. It continues to require individualized review of loan applications, written explanations for denials or changed terms, access to appraisals and supporting documents in certain cases, and public disclosure of general lending criteria through pamphlets or similar materials. It also preserves the rule that compliance with federal Equal Credit Opportunity Act requirements satisfies the state written-explanation requirement.
Impact
HB5497 would amend MCL 445.1601 and 445.1602 to modernize and expand the state’s mortgage lending anti-redlining framework. It would affect banks, credit unions, savings and loan associations, the Michigan State Housing Development Authority, and other mortgage lenders operating in Michigan by changing minimum loan thresholds, disclosure obligations, and the regulatory terminology used in the statute. The bill would also require periodic CPI-based adjustments to the minimum dollar amounts, creating an ongoing administrative role for the director and state treasurer.
Sentiment
The available voting history suggests the bill was generally supported, though not unanimously. It was reported from committee with a 11-0 vote and then passed the House on third reading by a 72-29 margin with immediate effect, indicating broad but not universal agreement. The lack of committee transcript material limits insight into detailed debate, but the vote pattern suggests the bill was viewed favorably by a majority while still drawing some opposition on the floor.
Contention
The main points of contention appear to be the bill’s increased minimum loan thresholds and the added compliance obligations for lenders, including written explanations, document production, and public disclosure requirements. Opponents likely focused on the burden these changes could place on mortgage lenders and credit unions, especially smaller institutions, while supporters likely emphasized consumer access, transparency, and anti-discrimination protections in mortgage lending. The bill also preserves an exception for credit unions regarding non-members, which may reflect sensitivity to concerns about credit union membership rules.
Prohibits mortgagee from refusing to accept partial mortgage payments from a mortgagor which does not bring the mortgagor current on such mortgagor's mortgage debt.
Prohibits mortgagee from refusing to accept partial mortgage payments from a mortgagor which does not bring the mortgagor current on his or her mortgage debt.
Prohibits mortgagee from refusing to accept partial mortgage payments from a mortgagor which does not bring the mortgagor current on his or her mortgage debt.