Sec. 49-31i. Determination of restructured mortgage debt. Limitations on amount of mortgage debt following restructuring. Computation of new mortgage debt.
Sec. 49-31i. Determination of restructured mortgage debt. Limitations on
amount of mortgage debt following restructuring. Computation of new mortgage
debt. (a) In determining the restructured mortgage debt, the court shall add the following
to the existing principal balance of the mortgage debt: (1) All interest then due the lender
and any interest that will be earned to the end of any restructuring period, including
interest on any payments advanced by the lender during the restructuring period, such
interest to be computed at the rate provided in the mortgage note, (2) real property
taxes, (3) premiums for Federal Housing Administration, Veterans' Administration and
private mortgage insurance, and (4) court costs, legal fees and any other sums the court
determines to be due under the terms of the mortgage indebtedness by the court. The
court shall then apply the composite interest rate as provided in subsection (c) of this
section to such total restructured debt over the remaining term of the loan.
(b) The amount of the mortgage debt at the end of any period of restructuring shall
in no event exceed either the amount of the original mortgage debt or ninety per cent
of the fair market value of the property as determined by an accredited real estate appraiser at the time of restructuring, whichever is greater. The provisions for restructuring
the mortgage debt and staying the foreclosure shall apply only if the debt as restructured
would not exceed such amount. Any sums added to the existing mortgage debt as a
result of a restructuring order shall accrue interest at prevailing market rates after the
conclusion of the restructuring period, which rate shall be either fixed or variable depending upon the underlying mortgage note.
(c) At the conclusion of the restructuring period, the new mortgage debt shall be
computed based upon a composite rate of interest. The composite rate of interest shall
be a weighted average of the original mortgage interest rate as to the principal balance
and the prevailing interest rate as to all sums added to the principal balance to establish
the total restructured mortgage debt, except that in the case of a flexible rate, variable
rate or similar adjustable rate mortgage note, the provisions of the underlying mortgage
note for the redetermination of the interest rate on the mortgage shall continue to apply
and remain in full force and effect during the remainder of the term of the mortgage.
(P.A. 83-547, S. 11; June Sp. Sess. P.A. 83-29, S. 76; P.A. 84-373, S. 4; P.A. 85-591.)
History: June Sp. Sess. P.A. 83-29 revised section, adding new provisions in Subsec. (a) re method of determination
of restructured mortgage debt, adding provisions re applicability of provisions for restructuring mortgage debt and staying
foreclosure and rate of interest on sums adding to existing mortgage note in Subsec. (b), and adding provisions in Subsec.
(c) re composite rate of interest; P.A. 84-373 amended Subsec. (a) to include interest on advancements made during the
restructuring period in the restructured debt; P.A. 85-591 amended Subsec. (b) to permit the restructured mortgage debt
to exceed the greater of the original mortgage debt or 90% of the fair market value of the property.
Cited. 29 CA 541. Cited. 31 CA 260. Cited. 34 CA 138.