Mary Hargrow v. Wells Fargo Bank N.A.
491 F. App'x 534
6th Cir.2012Background
- Hargrows borrowed $164,000 in 2006 secured by a mortgage on real property in Ypsilanti, Michigan.
- MERS acted as nominee for Lender and had the power to foreclose; the Mortgage stated MERS could exercise foreclosure rights.
- MERS assigned the Mortgage to Wells Fargo, with the assignment recorded in 2009; Wells Fargo later foreclosed by advertisement.
- Wells Fargo initiated foreclosure proceedings in 2009; a sheriff’s sale occurred in 2010 and Wells Fargo conveyed the Property to Fannie Mae.
- Hargrows sued to void the foreclosure, and the district court dismissed for failure to state a claim; the court of appeals AFFIRMS.
- The Michigan Supreme Court later clarified that MERS can foreclose by advertisement and that the record chain need only cover the mortgage, not the underlying debt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wells Fargo could foreclose by advertisement under 600.3204(1)(d). | Hargrows contend foreclosing party must own the indebtedness. | Wells Fargo, as holder of the Mortgage, or its assign, has sufficient interest. | Yes; foreclosing party may foreclose by advertisement. |
| Whether the assignment of the Mortgage from MERS to Wells Fargo was valid. | Assignment invalid because underlying debt not assigned. | Assignment valid per MERS power and case law. | Valid; MERS’s assignment to Wells Fargo was proper. |
| Whether a record chain of title under 600.3204(3) was required to show ownership of the underlying Note. | Chain must reflect owner of underlying debt. | Chain must reflect mortgage ownership; debt ownership not required. | Chain of title for the mortgage suffices; debt ownership not required. |
| Whether the hold of the mortgage and the debt must be in the same hands to foreclose. | Foreclosure requires alignment of mortgage and debt owner. | Foreclosing entity need only hold an interest in the indebtedness via the mortgage. | Not required that debt owner coincide with mortgagee. |
| Whether the sale is void due to statutory noncompliance. | Foreclosure was void for failure to comply with statutes. | Statutes satisfied; foreclosure valid. | District court’s dismissal affirmed on state-law grounds. |
Key Cases Cited
- Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (2006) (national banks are citizens where main office is located for § 1348 purposes)
- Davenport v. HSBC Bank USA, 739 N.W.2d 383 (Mich. Ct. App. 2007) (foreclosure by advertisement analysis under Michigan law)
- Residential Funding Co. v. Saurman, 805 N.W.2d 183 (Mich. 2011) (MERS may hold an interest in indebtedness and foreclose as record-holder of the mortgage)