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Michigan court denies motion to dismiss challenge to nonjudicial foreclosure

by: jsalera

Sun Oct 17, 2010 at 19:40:31 PM EDT

In the realm of law, Michigan is a non-judicial foreclosure state. Which, in my limited understanding of legal affairs, means that a foreclosure in Michigan is not a court affair but is carried out by the county sheriff’s upon their receipt of legal paperwork. The conventional wisdom regarding non-judicial foreclosures seems to be that there is no legal recourse for the homeowner to fight foreclosure. This excerpt from a recent Crane’s Business Detroit would seem to reinforce that view. (Click here to read the Crane’s Business Detroit article)

Charlotte-based Bank of America Corp. halted its national foreclosure filings last week, following announcements by other lenders to stop the process in 23 states.

Michigan — not one of the 23 states — is not likely to be impacted by the issues raised with national lenders, said David Trott, president of Farmington Hills-based Trott & Trott PC. Trott, who represents most of the national lenders for their foreclosure work in Michigan, said he is involved with roughly two-thirds of all Michigan foreclosure filings.

At issue has been a practice by banks to use so-called “robo signing,” putting signatures on some court documents without reading them. Trott said that in Michigan fewer than 1 percent of all foreclosures go through the courts, so affidavits signed without being read will not likely be an issue.

“Our process is much simpler here, and we typically don't have affidavits,” Trott said. “I'd be surprised if this is the basis to unwind any foreclosures in Michigan.” Issues are being raised in the so-called judicial states, where each foreclosure is overseen directly by the court system.

That conventional wisdom may not turn out to be completely accurate. Consider this post from the website of Foreclosure Defense Nationwide. (Click here to read the original post from Foreclosure defense Nationwide’s website.)


September 30, 2010

A Michigan trial court has denied the Defendants’ Motion to Dismiss a Complaint filed by the borrowers to challenge a nonjudicial foreclosure; denied the Defendants’ request that the borrower make escrow payments; and has requested additional documentation in connection with the Court’s concern as to the alleged authority of MERS to assign the note and mortgage. The borrowers are represented by Jeff Barnes, Esq. together with local Michigan counsel. The case involves a multi-level securitization.

The borrowers sued US Bank as the alleged “successor trustee” to Bank of America as successor by merger to LaSalle Bank as Trustee for a First Franklin securitized mortgage loan trust; MERS; and First Franklin. The supporting legal Memorandum prepared by Mr. Barnes highlights Michigan law which has held that there is no Michigan case law as to the authority of lender nominees or MERS and thus Michigan has looked to decisions from New York and Kansas involving these issues for guidance. The case cites the Landmark decision from Kansas within the opinion.

We view this interim decision as a clear indication that the courts of Michigan, like the courts of Oregon, California, Kansas, Nebraska, Vermont, Arkansas, Nevada, Missouri, and others are not blindly accepting MERS’ purported authority to assign mortgage paper and that MERS “solely as nomnee” cannot do so.

Legal challenges to foreclosure in Michigan are now only in their initial stage, it looks as if the pace will pick-up quickly as lawyers get trained in the specifics of foreclosure fraud. A sure bet is they will find no lack of clients.

jsalera :: Michigan court denies motion to dismiss challenge to nonjudicial foreclosure
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