Federal Court in Michigan Continues to Decline To Reconsider MERS-Related Foreclosures
Reston, VA – July 18, 2011 – (RealEstateRama) — Another ruling from the U.S. District Court in the Eastern District of Michigan Southern Division declined to reconsider a non-judicial foreclosure initiated by Mortgage Electronic Registration Systems, Inc. (MERS), as mortgagee, underscoring former borrowers’ lack of standing under Michigan law to challenge a foreclosure after the statutory redemption period has expired, further limiting the applicability of the Michigan Court of Appeals’ decision in Residential Funding v. Saurman/Bank of New York Trust v. Messner (“Saurman”).
On July 12, Judge Marianne O. Battani denied the plaintiff’s motion to reconsider the May 2011 judgment entered in favor of MERS and other defendants in March v. Countrywide Home Loans Servicing (“March”), writing in the opinion that “under Michigan law, once the redemption period following foreclosure of property has expired, the former owner’s rights in and title to the property are extinguished. Consequently, Plaintiffs lack standing to challenge their foreclosure,” citing to Piotrowski v. State Land Office Bd., 4 N.W.3d 514 (1942) and Overton v. Mortgage Electronic Registration Sys, No. 284950, 2009 WL 1507342 (Mich Ct App, May 28, 2009).
The plaintiffs’ motion argued that the May 2011 judgment denying their wrongful foreclosure claims should be reversed based on the Michigan Appellate Court’s April 2011 decision in Saurman, but the court disagreed with their argument. In the March opinion, Judge Battani stated, “[a]t most, Plaintiffs have presented case law from the state appellate court that supports a claim they never made in their complaint or proposed amended complaint. This showing does not trump the important policy interest in the finality of judgments.” The March ruling follows Judge Battani’s June 10th ruling in Knox v. Trott, in which she also found that the Saurman decision did not apply (in that case because MERS could assign its security interest before foreclosure, which it did).
Separately, in another decision from the U.S. District Court in the Eastern District of Michigan Southern Division, on June 9th, Judge John Corbett O’Meara ruled in favor of the lender in Williams v US Bank Nat’l Ass’n (“Williams”). In Williams, the plaintiffs also argued for the applicability of Saurman, but Judge O’Meara concluded that “Saurman does not apply here. In this case, U.S. Bank, not MERS, initiated the foreclosure by advertisement. To the extent Plaintiffs challenge any assignment from MERS to U.S. Bank, Plaintiffs lack standing to do so because they were not a party to those assignments.” See Livonia Props. Holdings, LLC v 12840-12976 Farmington Rd. Holdings, LLC, 399 F. Appx. 97, 102-03 (6th Cir. 2010).
Judge O’Meara in this case also noted that the Williamses lacked standing to challenge the foreclosure after the statutory redemption period, and stated, “In this case, the redemption period expired on September 2, 2010; therefore, Plaintiffs lack standing to challenge the foreclosure absent a showing of fraud or irregularity, neither of which Plaintiffs have shown.”
“The federal court’s rulings in the March and Williams cases reinforce that legally completed foreclosures are final once the redemption period has expired,” said Janis Smith, MERSCORP Vice President of Corporate Communications. “It’s also a clear signal that courts won’t automatically overturn completed foreclosure cases.”
Contact:
Janis L. Smith
Phone: 703-738-0230
Email:
Karmela Lejarde
Phone: 703-761-1274
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