**MICHIGAN HOUSE BILL [NUMBER]**
**introduced by Representative Ceric Lasentri**
**Constitutional Libertarian — Houghton County**

**AN ACT to protect Michigan veterans from residential foreclosure. To establish a sliding scale mortgage repayment framework based on military pension and disability benefits. To prohibit predatory foreclosure actions against veterans receiving service-connected compensation. To affirm the obligation of the State of Michigan to those who served.**

**THE PEOPLE OF THE STATE OF MICHIGAN ENACT:**

**SECTION 1. VETERANS LAND PROTECTION ACT**

This Act shall be known and cited as the Michigan Veteran Foreclosure Protection Act.

**SECTION 2. FINDINGS AND PURPOSE**

The Legislature of the State of Michigan finds and declares the following:

Veterans of the United States Armed Forces served this nation with their lives as their currency. They endured physical injury, psychological trauma, and permanent disability in defense of the freedoms that every Michigan resident enjoys. Many veterans return home unable to maintain traditional employment due to service-connected Post Traumatic Stress Disorder, traumatic brain injury, physical disability, and other conditions directly caused by their military service. These veterans depend on military pensions, VA disability compensation, and federal benefits as their primary or sole source of income. The State of Michigan has a moral and civic obligation to ensure that no veteran loses their home because a lender’s timeline does not account for the reality of what that veteran sacrificed. Existing foreclosure law fails to distinguish between a delinquent borrower who has the capacity to pay and a veteran who is medically and financially constrained by the consequences of their service. This Act corrects that failure.

**SECTION 3. DEFINITIONS**

As used in this Act:

“Covered veteran” means any person who served honorably in any branch of the United States Armed Forces, National Guard, or Reserve component and who receives or is eligible to receive military retirement pay, VA disability compensation, VA pension, or any combination of federal military benefits as their primary source of household income.

“Primary residence” means the dwelling occupied by the covered veteran as their principal place of habitation.

“Lender” means any bank, credit union, mortgage servicer, private lender, or financial institution holding or servicing a residential mortgage on a covered veteran’s primary residence.

“Sliding scale payment” means a monthly mortgage obligation calculated as a percentage of the covered veteran’s documented monthly military and federal benefit income as defined in Section 5 of this Act.

“Service-connected income” means all income received by a covered veteran from VA disability compensation, military retirement pay, VA pension, Social Security disability attributed to military service, and any state veteran benefit payments.

**SECTION 4. PROHIBITION ON FORECLOSURE**

No lender shall initiate, file, advance, or complete a foreclosure action against the primary residence of a covered veteran if all of the following conditions are met:

The covered veteran has submitted a written request to the lender invoking protection under this Act accompanied by documentation of their veteran status and service-connected income.

The covered veteran is making or offers to make sliding scale payments as defined in Section 5 of this Act.

The covered veteran’s delinquency is directly attributable to loss of employment income due to service-connected PTSD, physical disability, or medical condition as documented by a VA determination letter, a licensed physician, or a VA-approved mental health provider.

**SECTION 5. SLIDING SCALE PAYMENT FRAMEWORK**

A covered veteran invoking protection under this Act shall be entitled to a temporary modified payment schedule calculated as follows:

Veterans whose service-connected income is at or below 150 percent of the federal poverty level shall pay no more than 15 percent of their gross monthly service-connected income toward their mortgage obligation during the protection period.

Veterans whose service-connected income is between 151 percent and 200 percent of the federal poverty level shall pay no more than 22 percent of their gross monthly service-connected income toward their mortgage obligation during the protection period.

Veterans whose service-connected income exceeds 200 percent of the federal poverty level shall pay no more than 28 percent of their gross monthly service-connected income toward their mortgage obligation during the protection period.

The protection period shall be 24 months from the date the lender receives written notice from the covered veteran invoking this Act. The protection period may be extended by an additional 12 months upon application to the Michigan Department of Military and Veterans Affairs if the covered veteran demonstrates continued financial hardship attributable to service-connected conditions.

During the protection period all accrued interest above the original loan rate shall be suspended. Late fees and penalty charges shall not accrue. The lender shall not report the modified payment as a default or delinquency to any credit reporting agency.

**SECTION 6. LENDER OBLIGATIONS**

Upon receiving written notice from a covered veteran invoking this Act a lender shall within 30 days do all of the following:

Acknowledge receipt in writing and suspend all foreclosure proceedings.

Calculate and provide in writing the applicable sliding scale payment amount based on the veteran’s documented income.

Designate a single point of contact at the lending institution who shall remain assigned to the veteran’s account for the duration of the protection period.

Provide a written payment plan showing how the deferred balance will be reconciled at the conclusion of the protection period including options for loan modification, extension of loan term, or subordinate lien arrangement.

**SECTION 7. ENFORCEMENT AND PENALTIES**

Any lender who proceeds with foreclosure in violation of this Act or who fails to comply with the obligations set forth in Section 6 shall be subject to the following:

A civil penalty of not less than $25,000 per violation payable to the State of Michigan.

Liability to the covered veteran for actual damages including all costs of defending the foreclosure action, attorney fees, and emotional distress damages.

Suspension of the lender’s license to operate in Michigan for a period not to exceed 24 months for repeated or willful violations as determined by the Michigan Department of Insurance and Financial Services.

**SECTION 8. NO WAIVER**

The protections afforded by this Act may not be waived by contract, agreement, or any provision in a mortgage instrument. Any clause in a mortgage document that purports to waive the veteran’s rights under this Act is void and unenforceable.

**SECTION 9. RELATIONSHIP TO OTHER LAW**

The protections provided by this Act are in addition to and not in lieu of any federal protections afforded to veterans under the Servicemembers Civil Relief Act or any other federal statute. Where state law provides greater protection to the veteran the state law shall govern.

**SECTION 10. EFFECTIVE DATE**

This Act takes effect 90 days after the date of enactment.

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*Introduced and sponsored by Ceric Lasentri, Constitutional Libertarian, Houghton County. In service to the men and women who gave this state and this nation everything they had.*

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