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HB 6196

Financial institutions: mortgage brokers and lenders; consolidation of certain licensing statutes related to residential mortgages; make conforming changes in the motor vehicle sales financing act. Amends sec. 5 of 1950 (Ex Sess) PA 27 (MCL 492.105). TIE BAR WITH: HB 6177'26

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

The bill reduces bond requirements for sales finance licensees, offering a temporary $5,000 bond for mortgage-licensed entities during a six-month transition, with standard bonds o

bill electronically reproduced 07/03/2026
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Bill Summary · HB 6196

Summary of HB 6196 (Michigan, 2025-2026)

HB 6196, introduced July 3, 2026, by Reps. Fairbairn and Tisdel, is a financial-licensing bill that ties into broader reform of mortgage licensing and related financial-use statutes. The bill is introduced in the House Finance Committee and carries a tie-bar with HB 6177/’26 (i.e., it is contingent on enactment of the companion or related measure).

Main purpose and intent

  • The bill amends the Motor Vehicle Sales Finance Act (1950 Ex Sess) PA 27, specifically Section 5, to adjust bonding requirements for applicants seeking licenses as sales finance companies.
  • It appears designed to synchronize or consolidate licensing standards and bonding requirements with a broader set of mortgage lending and supervision reforms, as indicated by references to the Residential Mortgage Licensing and Supervision Act and related mortgage acts.

Key provisions and changes

  • Bond requirements for applicants seeking a license as a sales finance company:
    • A bond in the penal sum of $20,000 must accompany the first license application and cover the principal place of business.
    • A bond in the penal sum of $10,000 must accompany applications for an additional location to transact business as a sales finance company.
  • Bond amount adjustments for certain licensees:
    • For six months after the effective date of the Residential Mortgage Licensing and Supervision Act (and related mortgage acts listed in subsections), the required bond amount is reduced to $5,000 if the applicant is licensed under specified mortgage-related acts:
    • Mortgage brokers, lenders, and servicers licensing act (Act No. 173 of 1987; Michigan Compiled Laws 445.1651 to 445.1683) or related 1981 Act provisions.
    • Secondary mortgage loan act (1981 PA 125; MCL 493.51 to 493.81) and related provisions.
    • Residential Mortgage Licensing and Supervision Act (upon effective date).
    • Regulatory Loan Act of 1963 (Act No. 21 of 1939; MCL 493.1 to 493.24).
  • Bond form and execution:
    • Bonds must be executed by a surety company authorized to operate in Michigan.
    • If the licensee is a financial institution located in Michigan, the bond may be executed by the financial institution on its own behalf (instead of a surety company).
    • Bonds are for the benefit of the State of Michigan and any aggrieved person, with the licensee required to comply with the Act and related administrator rules, and to pay amounts due to the state, administrator, or any person(s) as applicable.
    • Individuals aggrieved by a licensee’s misconduct may sue on the bond in a court with jurisdiction, subject to established judgments and service of process within Michigan.
  • Renewal bond/certificate:
    • A new bond or renewal certificate must accompany every renewal application and be filed at least 15 days before July 1 each year.
  • Enactment condition:
    • The Act’s the substantive changes take effect only if HB 6177 (the tie-bar companion) is enacted into law.

Who and what would be affected

  • License applicants for Michigan sales finance companies (including those seeking first licensure and additional location licenses) under the Motor Vehicle Sales Finance Act.
  • Licensees with mortgage-related licensure (as defined in the bill) may access a reduced bond amount ($5,000) for six months after the effective dates of the referenced mortgage acts, potentially lowering bond costs during a transition period.
  • Financial institutions that qualify to issue bonds on their own behalf (instead of using a surety) under the bond provisions.
  • The State of Michigan, the administrator (the licensing agency), and any persons injured by licensee misconduct who may claim against the bond.

Procedural and timeline aspects

  • Effective date contingent upon enactment of HB 6177.
  • Renewal bonding requirements specify a pre-July 1 annual filing deadline (must accompany renewal applications at least 15 days before July 1).
  • The six-month temporary bond reduction period begins after the effective date of the residential mortgage licensing and supervision act (and related acts as listed).

Practical impact and considerations

  • Potential cost savings for new mortgage-licensed entities during transitional periods due to reduced bond requirements.
  • Increased alignment between motor vehicle sales financing licensing and mortgage-related licensing regimes, signaling broader consolidation of licensing standards.
  • Administrative requirement for timely renewal bonding to avoid license issues.
  • The tie-bar nature means the full policy impact depends on the companion HB 6177’s passage and its provisions.

If you’d like, I can provide a side-by-side comparison with the current law and a brief risk/impact assessment for licensing practitioners and financial institutions.

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

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