SBM Real Property Law Section eNewsletter

April 2010

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Survey Results

By Jerome P. Pesick of Steinhardt Pesick & Cohen PC, Chair

We recently received the results from the Membership Questionnaire which was circulated and e-mailed to all Section members earlier this year. We are very pleased with the number of responses we received. Thanks to all who participated.

Among the things that stood out in the responses was that first and foremost, the Section needs to continue to further its efforts to recruit new and younger members to the Section. 45% of those responding have been in practice between 5 and 20 years, and 35% have been in practice for more than 20 years. Only about 20% of our members who responded have been in practice for less than 5 years. We have dedicated a great deal of our efforts this year to recruiting new and active younger members, and we will continue to do so.

Another item that stood out is that the great majority of our membership, some 71% of those responding to the survey, confirm that continuing legal education is the most important benefit to them of Section membership, and over 84% indicate that they are either satisfied or extremely satisfied with Section programming. While we will continue to work to improve and diversify our programming, we are pleased that members place a high value on the Section's efforts to provide quality CLE programming.

The final item that stood out, is that over 50% of Section members have expressed an interest in viewing online the information the Section provides, whether it be conference or program material, the Michigan Real Property Review, or presentations themselves. Past issues of the Michigan Real Property Review are already available online, and for the first time, conference materials for our recent winter conference in Scottsdale, Arizona were made available online for conference registrants. In addition we are now offering webcasts of Homeward Bound programs. We hope to continue these efforts, with the goal of making participation in Section activities easier and more convenient for our members. Any of you who would like to discuss the survey results in more detail, please feel free to contact me at

SAFE Act Not So Safe for Homeowners

By Ingrid Szura, Jaffe Raitt Heuer & Weiss PC

Seller financing for homes may be curtailed by HUD's proposed regulation of residential mortgage loan originators. HUD's proposed regulations issued on December 15, 2009 (74 FR 66548) pursuant to the 2008 S.A.F.E. Act set forth the minimum regulations that states must enact requiring any individual who takes a residential mortgage loan application and offers or negotiates residential mortgage loan terms for compensation or gain to register as a loan originator with the Nationwide Mortgage Licensing System and Registry.

One of the biggest complaints among industry groups is that the proposed regulations require any seller who provides financing for residential property to become a licensed and registered loan originator unless the financing is for the sale of his or her own primary residence. There is no exemption for sellers who provide financing for their 1-4 family rental properties, second homes, or vacation homes. The proposed regulations also do not contain any exemption for sellers who engage in a limited number of seller-financing transactions each year. Sellers that offer land contracts, or senior or subordinate mortgage financing to buyers, will have to comply with all of the registration requirements as full-time mortgage brokers, including initial and continuing education and testing requirements, payment of initial and annual registration fees, fingerprinting, background, and credit checks. Industry groups have expressed their concern to HUD that these proposed regulations would effectively end seller-financing and, due to the lack of available third-party financing in many markets, would do nothing to help reduce unsold residential inventories and increase overall sales.

HUD's comment period for these proposed regulations ended on March 5, but HUD may review comments that are submitted late. We will keep you informed of how HUD addresses these concerns.


An Erroneous Sheriff's Sale Credit Bid

By Tobias J. Lipski, General Counsel, Schneiderman & Sherman, PC

In the unpublished case, American Home Mortgage Servicing v. Panko, et al. (Mich. Ct. App., No. 289585, Mar. 9, 2010), plaintiff mortgagee sought to set aside its foreclosure sale when plaintiff submitted an erroneous credit bid and the homeowner who redeemed had knowledge of the error. The trial court ruled in favor of plaintiff after finding both "a grossly inadequate sale price and a mistake." The appellate court reversed and remanded, finding no mutual mistake warranting application of equity where the parties' rights are controlled by statute.

While counsel should take care to avoid clerical errors in instrument preparation, this case does not provide cut and dried guidance. The court would not apply equity without finding fraud, mistake, unfairness, irregularity, or accident—the latter by reference to Senters v. Ottawa Savings Bank, FSB, 503 N.W.2d 639 (Mich. 1993). The court restricted its analysis to finding unilateral mistake, comparing the facts in this case to Townsend v. Chase Manhattan Mortgage Corp., 657 N.W.2d 741 (Mich. Ct. App. 2002), where an intended mortgagee lent money to borrower without securing a lien against borrower's co-owner. The court focused on who acted, stressing that the mistake "was clearly unilateral on the part of American Home," rather than evaluating the nature of the mistake. Specifically, the court did not assess whether the mistake could be construed as mutual and common to the parties or expressed the true intent of the parties. SeeStapleton, et al. v. Schaffer, et al., 109 N.W. 665 (Mich. 1906); Northpointe Bank v. Brotherton, No. 279035, 2008 WL 4181737 (Mich. Ct. App., Sep. 11, 2008) (citing Schmalzriedt v. Titsworth, 9 N.W.2d 24 (Mich. 1943)).

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Thursday, April 22, 2010
7:30-10:00 a.m.
"Groundbreaker" Breakfast Roundtable
When Advertisement Isn't Enough—The Court Process & Foreclosures/Workouts
Detroit Athletic Club

May 13, 2010
2:00–5:00 p.m.
Homeward Bound
Only Fools Rush In: The Fundamentals of Real Estate Due Diligence
Inn at St. John's, Plymouth

Thursday, June 3, 2010
7:30–9:30 a.m.
"Groundbreaker" Breakfast Roundtable
Current Issues in Multi-Family Law and Financing
Townsend Hotel, Birmingham

July 14–17, 2010
2010 Summer Conference
The New Normal—Working With Today's Realities
Crystal Mountain Resort, Thompsonville