Trademark Properties of Michigan, LLC v. Federal National Mortgage Ass'n
308 Mich. App. 132
| Mich. Ct. App. | 2014Background
- In 2003 Earl Strickfaden executed a mortgage with MERS as mortgagee; after default MERS’s mortgage was foreclosed by advertisement and Fannie Mae purchased the property at sheriff’s sale on May 11, 2010, receiving and recording a sheriff’s deed; the property was not redeemed.
- Manor Homes of Troy Association (MHTA) later recorded a condominium-assessment lien and foreclosed by advertisement; Trademark Properties bought the property at that sheriff’s sale on Feb 15, 2011, and recorded its deed.
- Before the redemption period expired, counsel for GMAC (the original lender) recorded an affidavit asserting the May 2010 sheriff’s sale to Fannie Mae was void ab initio under this Court’s then-decision in Residential Funding Co v Saurman, thereby claiming the MERS mortgage remained in force.
- Trademark filed a quiet-title action challenging the affidavit’s effectiveness to revive the extinguished MERS mortgage; the trial court granted summary disposition for defendants, ruling the affidavit revived MERS’s interest and that Trademark was not a bona fide purchaser.
- On appeal the Court of Appeals reversed, holding the MERS foreclosure had been valid and the MERS mortgage extinguished (because the Michigan Supreme Court had since reversed Saurman), so the affidavit could not revive a previously extinguished mortgage; Trademark had the superior title.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to assert competing property interest | Defendants lack standing to assert superior interest | Defendants have a sufficient legal interest to contest title | Defendants have standing; quiet-title statute authorizes the suit |
| Effect of post-sale affidavit claiming foreclosure was void ab initio | Affidavit cannot revive an already-extinguished mortgage and cannot defeat Trademark’s recorded sheriff’s deed | Affidavit (filed before redemption expired) expunged prior sheriff’s sale and revived MERS’s mortgage | Affidavit could not revive extinguished mortgage; Saurman reversal meant MERS mortgage was extinguished and Trademark held superior title |
| Validity of MHTA’s foreclosure notice under MCL 559.208(3)(c) | Foreclosure valid; notice sent to address on Fannie Mae’s sheriff’s deed | Notice was insufficient because Fannie Mae lacked actual notice | Notice complied with statute (service to last known address is sufficient) |
| Liability for assessments during redemption period / lien amount calculation | Trademark’s purchase cut off prior interests; MHTA’s lien valid as calculated | Fannie Mae argued it shouldn’t be liable for assessments arising after its sheriff’s deed | Court rejected Fannie Mae’s argument; purchaser at foreclosure can be liable for post-deed assessments |
Key Cases Cited
- Residential Funding Co, LLC v. Saurman, 292 Mich. App. 321 (Mich. Ct. App.) (held MERS lacked interest to foreclose by advertisement)
- Saurman v. Residential Funding Co., 490 Mich. 909 (Mich.) (Michigan Supreme Court reversing this Court’s Saurman decision)
- Dunitz v. Woodford Apartments Co., 236 Mich. 45 (Mich. 1926) (foreclosure by advertisement extinguishes the mortgage; purchaser’s equitable interest ripens into legal title if not redeemed)
- Senters v. Ottawa Savings Bank, FSB, 443 Mich. 45 (Mich. 1993) (statutory framework and effects of foreclosure by advertisement)
- Kubicki v. Mortgage Electronic Registration Sys., 292 Mich. App. 287 (Mich. Ct. App.) (standard for setting aside statutory foreclosure requires strong showing of fraud or irregularity)
- Wells Fargo Bank v. Country Place Condo. Ass’n, 304 Mich. App. 582 (Mich. Ct. App.) (purchaser at foreclosure sale can be liable for assessments arising after issuance of the sheriff’s deed)
- Smith v. Cliffs on the Bay Condo. Ass’n, 463 Mich. 420 (Mich. 2000) (notice to last known address recorded in deed satisfies statutory notice requirement)