NPN and the Michigan Homeowner Assistance NonProfit Housing Corp?

Question

Hi,

I'm in DD on a note in Michigan.  There is a second mortgage on the O&E held by the Michigan Homeowner Assistance NonProfit Housing Corporation Acting Through Michigan State Housing Development Authority

(Whew!!! what a pithy name.........GREAT for marketing.....)

This is a Future Advance Mortgage. Question 1: What is a "Future Advance Mortgage"?

The verbiage in this second mortgage makes it sound like it remains a lien on the property no matter what happens.  (And governments can make that happen......)

Has anyone dealt with a second mortgage like this in a NPN?

I appreciate everyone's time and effort.

Thanks!!!

Bill

Bill Gulley · Answer

Super liens are established by stature or court order, not by agreement of a Trust, but the best way to know where you stand is by calling the  MI, housing development office, but I doubt it is.

The second appears to me to be held by a non-profit association, a requirement for bonding through the state finance/development office, the state backs the bonds used for the loan advanced but it doesn't have to hold the note, but they could.

Housing development bonds generally are not super liens by the virtue of the mortgage, they hold the same position as if the mortgage were held by any lender.

The foreclosure procedure appears to have been made some time ago, under federal law, any borrower must be given notice, regardless as to what may have been agreed, IMO.

If you have a NPN first, simply include the balance of the second, if you hold the second, better cross your fingers and pray, but I can't see you holding a housing development note either.

Call the development office, they should tell you how they view the lien and your position, it's best to clear the air than to speculate, but I wouldn't have an issue with that mortgage. Good luck :)

Bill B. · Answer

@Mike Hartzog @Bill Gulley

As always, great input from you both!!

Thank you both for your time and effort!

Mike Hartzog · Answer

Hi Bill - I haven't had to deal with one of these liens directly.  I would recommend engaging an MI foreclosure attorney for a review.

Bill B. · Answer

Hi,

@Bill Gulley @Ellis San Jose @Mike Hartzog

Ellis, Bill, and Mike, do any of you have any insight into the powers of this State of Michigan second mortgage mentioned above?  It was in connection with Hardest Hit efforts for which the borrower qualified.

Is this second mortgage a "super lien" because the lien holder is the State of Michigan or have other "super powers"?  Can it be wiped out by FC?

The "nature" of this second may influence my bid on the note or whether I close on it at all.

Here an example of troublesome language in the Mortgage:

"This Mortgage contains a Power of Sale and upon default may be foreclosed by advertisement as herein provided. Upon default being made in the payment of sums of money herein agreed to be paid, or in the performance of any of the covenants or agreements herein contained according to the terms hereof or of the Mortgage Note secured hereby, the holder of the Mortgage Note is hereby authorized and empowered to sell the Property or cause it to be sold and to convey the same to the purchaser in any lawful manner, including but not limited to that provided in Chapter 32 of the Revised Judicature Act (MCL 600.3201, et seq) entitled "Foreclosure of Mortgage by Advertisement" , which permits the mortgage holder to sell the Property without affording the Mortgagor a hearing, or giving the Mortgagor personal notice; the only notice required is to publish notice in a newspaper of general circulation in the county in which the Property is located and to post a copy of the notice on the Property."

i.e. no recorded docs that would show on an O&E until after a subsequent sale by the State of Michigan.

Is that how you'd read this?

Should I be as frightened by this as I am?