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HB 6197

Financial institutions: mortgage brokers and lenders; consolidation of certain licensing statutes related to residential mortgages; make conforming changes in RS 1846 ch 65. Amends sec. 25 of 1846 RS 65 (MCL 565.25). TIE BAR WITH: HB 6177'26

2025-2026 Regular Session Introduced by Parker Fairbairn and 1 co-sponsor

The bill requires full accounting and proof of notice with encumbrance recordings, tying its effect to a new residential mortgage licensing framework.

bill electronically reproduced 07/03/2026
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Bill Summary · HB 6197

Overview

  • Bill: HB 6197 (Session 2025-2026)
  • Jurisdiction: Michigan
  • Introduced: July 3, 2026 by Reps. Fairbairn and Tisdel; referred to Committee on Finance
  • Tie Bar: Requires enactment of HB 6177 ( related to residential mortgage licensing and supervision act ) for this act to take effect

Main purpose and intent

  • The bill amends 1846 RS 65, section 25, regarding the perfection of encumbrances (such as liens, attachments, and lis pendens) on real property by requiring additional conditions to accompany recorded instruments of encumbrance.
  • It consolidates or aligns licensing statutes related to residential mortgages by tying its effective date and scope to the upcoming residential mortgage licensing and supervision act.

Key provisions and changes

  • For an instrument of encumbrance to be perfected upon recording, the following must accompany the instrument when delivered to the register:
    • (1)(a) A full and fair accounting of facts supporting the recording and any supporting documentation, as available.
    • (1)(b) Proof of service confirming actual notice to the recorded landowner of the land affected.
  • Subsection (1) does not apply to several specified categories, including:
    • Tax liens not required to be recorded under the General Property Tax Act.
    • Filings authorized by state/federal statute.
    • Consensual encumbrances (e.g., mortgages, loan agreements, land contracts) between the property owner and the party seeking to record.
    • Encumbrances authorized by final court orders.
    • Encumbrances filed by certain financial and government-related entities, defined broadly to include:
    • Banks, savings institutions, credit unions, and other chartered lending entities
    • Insurance companies, motor vehicle finance companies with substantial net assets
    • Foreign banks, retirement/pension funds with substantial net assets
    • Federal/state/local agencies capable of holding security interests
    • Nonprofit economic development organizations with majority government-held assets
    • Farm credit system entities
    • Various consumer finance and credit-related licensees (e.g., mortgage brokers/lenders/servicers, home improvement finance, retail installment sellers, consumer finance acts, regulatory loan act, etc.)
    • Beginning on the effective date of the residential mortgage licensing act, licensees under specified mortgage-related statutes
  • The bill lists numerous categories under which an encumbrance filing is exempt from the new requirement, including entities in the residential mortgage licensing and supervision ecosystem and related licensees for a transitional period (e.g., six months for certain mortgage-related licensees).
  • A penalty provision: A person who encumbers property without lawful cause or with harassing/intimidating intent remains subject to penalties under section 2907a of the Revised Judicature Act.
  • Enacting clause: The act only takes effect if HB 6177 is enacted.

Who is affected

  • Real property owners and landowners, who may require additional documentation and proof of notice for encumbrances recorded against their property.
  • Recorders of instruments of encumbrance (county registers) who must verify compliance with the new requirements.
  • Commercial lending institutions and a broad range of licensees and regulated entities listed in the statute, including:
    • Banks, savings associations, credit unions, foreign banks
    • Insurance companies, retirement/pension funds, and certain government-related entities
    • Mortgage-related licensees (mortgage brokers, lenders, servicers) and related acts (e.g., home improvement finance, consumer financial services, regulatory loan act, residential mortgage licensing and supervision act once in effect)
  • Those operating under transitional or temporary exemptions (the six-month windows) as the new licensing framework is implemented.

Procedural and timeline aspects

  • Effective date contingent on enactment of HB 6177; the tie bar creates a synchronized implementation with the residential mortgage licensing and supervision act.
  • Transitional exemptions for certain licensees (e.g., six months after the effective date) to facilitate the shift to the new regulatory regime.
  • The bill is an amendment to existing Michigan statute (1846 RS 65) and interacts with a broader reform package affecting residential mortgage licensing and supervision.

Practical impact and considerations

  • The measure enhances transparency by requiring a full accounting and notice proof to accompany encumbrance filings, potentially reducing fraudulent or defective filings.
  • It broadens the scope of entities exempt from the new recording requirements, especially financial institutions and government-related entities, balancing streamlined processing with property owner protections.
  • The enforcement focus includes penalties for improper encumbrance filings, reinforcing compliance with the enhanced standards.

Compiled from official sources — confirm details with the bill’s official record.

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