HB 5153: Civil procedure: foreclosure; distribution of proceeds from mortgage foreclosure auctions; modify. Amends secs. 3240 & 3252 of 1961 PA 236 (MCL 600.3240 & 600.3252). TIE BAR WITH: HB 5152'25 - Michigan

As Passed by the House → Substitute (H-2) · 5 edits

MODERATE

The substitute bill makes three substantive policy changes: it removes an exemption that had shielded the foreclosing party and subordinate lienholders from the redemption rights assignment protections in section 3240a; it replaces the interpleader complaint procedure for surplus funds in section 3252 with a simpler process of paying the surplus and filing the claim with the court clerk; and it changes the housing counselor reference in the required notice from HUD-certified to MSHDA-certified (Michigan State Housing Development Authority).

SCOPE

Removed subsection 3240a(7), which had exempted the foreclosing party and any person with a subordinate interest in the property from all requirements of section 3240a. This means the notice, cooling-off, recording, and damages provisions now apply even when the buyer of the redemption right is the lender that foreclosed or a junior lienholder.

REQUIREMENT

Section 3252(2) changed from requiring the sale officer to file a complaint in interpleader under MCR 3.603 and deposit the surplus with the court, to simply paying the surplus and filing the written claim with the clerk of the circuit court. This eliminates the formal interpleader pleading requirement.

Removed former section 3252(5), which required the state court administrative office to develop a standardized form for the interpleader complaint. This is consistent with the removal of the interpleader procedure.

TECHNICAL

The required notice language in section 3240a(2)(g) changed from referencing a 'HUD-CERTIFIED HOUSING COUNSELOR' to an 'MSHDA-CERTIFIED HOUSING COUNSELOR,' shifting the reference from a federal housing agency certification to Michigan's state housing development authority.

Section 3240a(1) removed the introductory phrase 'Except as provided in subsection (7),' which is consistent with the deletion of that subsection. Subsections formerly numbered (8) through (12) were renumbered as (7) through (11).

House Introduced Bill → As Passed by the House · 10 edits · Jul 1, 2026

MAJOR

HB 5153 replaces a blanket prohibition on transferring a homeowner's right of redemption after foreclosure with a new regulated framework (section 3240a) that permits assignments but imposes notice, cooling-off, disclosure, and recording requirements designed to protect homeowners from being pressured into selling their redemption rights for less than the property is worth. The bill also reformulates how surplus funds from foreclosure sales are handled when claims exist, requiring an interpleader complaint filed with the court rather than a simple filing with the clerk.

REQUIREMENT

New section 3240a creates a detailed regulatory framework for assignments of a mortgagor's right of redemption. It requires a separate written notice in 14-point bold type containing property value disclosures (state equalized value, estimated market value, exact redemption amount, approximate value of the redemption right, amount being paid, and expiration date), a mandatory 7-day cooling-off period before the assignment can be presented for signature, and recording of the instrument within 30 days.

Former section 3240(17), which flatly prohibited assignment or transfer of the right of redemption after notice of foreclosure was recorded (except by succession), is deleted and replaced by the more nuanced framework in new section 3240a.

Section 3252(1) adds a 90-day waiting period after a foreclosure sale before a demand to pay the surplus may be made, unless a claim is filed under subsection (2).

ENFORCEMENT

Section 3240a(3) establishes damages for non-compliance equal to fair market value minus redemption amount minus consideration paid. Willful violations trigger double damages, with presumptions of willfulness if the assignee is a business acquiring distressed properties, has acquired more than one redemption right in three years, backdated the notice, took steps to prevent legal counsel, or failed to record within 120 days. Beneficial owners and controlling persons are jointly and severally liable.

Section 3240a(10) imposes a civil penalty of $50 per day (capped at $25,000 per instrument) for failure to record the assignment and notice within 30 days, in addition to any damages under subsection (3).

SCOPE

Section 3240a(6) limits the new assignment rules to residential property not exceeding 4 units. Section 3240a(7) exempts assignments to the foreclosing party or holders of subordinate interests.

Section 3252(4) now explicitly limits the non-assignability of surplus money rights to residential property as defined in section 3240a(6), rather than applying to all property.

TECHNICAL

Section 3252(2) changes the procedure when a claim on surplus funds is filed: the officer must now file a complaint in interpleader under MCR 3.603 and deposit the surplus with the court, rather than simply filing the written claim with the circuit court clerk.

New section 3252(5) directs the state court administrative office to develop a standardized interpleader form for use in surplus fund disputes, which satisfies both the procedural requirements of subsection (2) and the pleading requirements of MCR 6.302.

The enacting clause removes the reference to an unnumbered Senate Bill (request no. S00820'25) as a companion bill, leaving only House Bill No. 5152 as the required companion for this act to take effect.

Substitute (H-2) - 2 → As Passed by the House · 5 edits · Jul 1, 2026

MODERATE

This bill amends Michigan's foreclosure redemption laws to clarify how redemption periods are calculated for different property types and introduces a new section regulating the assignment of redemption rights. It establishes specific timelines for commercial, residential, and agricultural properties, adds protections for properties abandoned due to foreclosure, and creates strict rules requiring notices and cooling-off periods when someone sells a foreclosed homeowner's right to reclaim their property.

Scope change

The bill expands the scope of redemption protections by adding specific rules for abandoned properties and agricultural land, while narrowing the applicability of the new assignment rules to residential properties of four units or fewer.

REQUIREMENT

Added a new section (3240a) that strictly regulates the assignment of redemption rights, requiring a specific notice, property value disclosures, and a mandatory 7-day cooling-off period before a seller can sign an assignment agreement.

Added requirements for the Register of Deeds in medium-sized counties to determine the exact redemption amount upon request, with liability protections for clerical errors.

TIMELINE

Modified redemption periods to be 6 months for commercial/industrial properties and 1 year for agricultural properties, while setting a 1-month period for abandoned residential properties.

ELIGIBILITY

Added a presumption that property is used for agricultural purposes if the mortgagor filed a Schedule F tax form, extending the redemption period for those properties.

DEFINITION

Clarified that a conveyance of a home does not automatically transfer the right of redemption unless explicitly stated, and defined 'residential property' for the new assignment rules as properties where residential use is the principal use.

Substitute (H-4) → Substitute (H-2) - 2 · 1 edit

MINOR

The bill version was updated from the House Substitute (H-4) to the House Substitute (H-2), indicating a revision in the legislative drafting process. The changes consist entirely of technical updates to the document header, including the bill identifier and version number, without any modifications to the substantive policy text, scope, or requirements.

TECHNICAL

The bill version identifier was changed from H-4 to H-2, and the associated tracking codes were updated to reflect this new version.

Substitute (H-2) → Substitute (H-4) · 1 edit

MINOR

The bill version was updated from H-2 to H-4, indicating a revision in the legislative process. The changes consist entirely of updating the bill version number and associated tracking codes in the header, with no alterations to the actual policy text, definitions, or requirements.

TECHNICAL

The bill version identifier was updated from H-2 to H-4, reflecting a procedural revision rather than a substantive policy change.

House Introduced Bill → Substitute (H-2) · 4 edits

MODERATE

The bill was amended to add a new section (3240a) that clarifies who can redeem a property after foreclosure, explicitly referencing sections 3214 and 3240a. It also updated the introductory text to reflect this new addition. The core rules for calculating redemption amounts and timelines remain largely the same, though the text was cleaned up to remove redundant phrasing.

Scope change

The bill's scope was expanded by adding a new section (3240a) regarding redemption rights, which is now referenced in the main text of Section 3240.

SCOPE

Added a reference to a new section 3240a in Section 3240(1), indicating that redemption rights are now subject to rules in that new section.

Added a new section 3240a to the bill, though the full text of this new section is not included in the provided diff snippet.

TECHNICAL

Corrected a grammatical error in Section 3240(2) where the phrase 'shall must be' was changed to 'shall be'.

Removed redundant and confusing phrasing in Section 3252 regarding surplus money distribution to improve clarity.

Civil procedure: foreclosure; distribution of proceeds from mortgage foreclosure auctions; modify. Amends secs. 3240 & 3252 of 1961 PA 236 (MCL 600.3240 & 600.3252). TIE BAR WITH: HB 5152'25

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