Opinion Date: 11/16/2011
Issues: Whether Mortgage Electronic Registration System (MERS) qualified under MCL 600.3204(1)(d) to foreclose by advertisement; What being the "owner . . . of an interest in the indebtedness secured by the mortgage" requires; Whether having an "interest in the mortgage" is sufficient; A "mortgage"; Citizens Mortgage Corp. v. Michigan Basic Prop. Ins. Ass'n; Whether MERS was a contractual owner of an interest in the notes based on its agreement with the lenders; Whether MERS had authority to foreclose by advertisement as the "agent" or "nominee" of the lender; Statutory interpretation; Coblentz v. City of Novi; Wickens v. Oakwood Healthcare Sys.; DiBenedetto v. West Shore Hosp.; Applicability of Jackson v. Mortgage Elec. Registration Sys., Inc. (MN); Applicability of Davenport v. HSBC Bank USA; Arnold v. DMR Fin. Servs., Inc. (After Remand); MERS v. Nebraska Dep't of Banking & Fin. (NE); Judicial foreclosure (MCL 600.3105(2)); Church & Church Inc. v. A-1 Carpentry; McKeighan v. Citizens Commercial & Sav. Bank; Cavnasser v. Bankers Trust Co.
Court: Michigan Supreme Court
Case Name: Residential Funding Co. v. Saurman
e-Journal Number: 50185
Judge(s): Young, Jr., Markman, M.B. Kelly, and Zahra; Voting to grant leave to appeal - Cavanagh, M. Kelly, and Hathaway
In an order in lieu of granting leave to appeal, the court reversed the judgment of the Court of Appeals in a published opinion (see e-Journal # 48625 in the 4/25/11 edition). As the Court of Appeals dissenting opinion explained, "pursuant to MCL 600.3204(1)(d), Mortgage Electronic Registration System (MERS) is the ‘owner . . . of in interest in the indebtedness secured by the mortgage' at issue in each of these consolidated cases" because "MERS' contractual obligations as mortgagee were dependent on whether the mortgagor met the obligation to pay the indebtedness which the mortgage secured." The court clarified that MERS' status as an "owner of an interest in the indebtedness" did not equate to an ownership interest in the note. Rather, "as record holder of the mortgage, MERS owned a security lien on the properties, the continued existence of which was contingent "upon the satisfaction of the indebtedness." This interest in the indebtedness - "the ownership of legal title to a security lien whose existence is wholly contingent on the satisfaction of the indebtedness - authorized MERS to foreclose by advertisement under MCL 600.3204(1)(d)." In interpreting predecessor foreclosure-by-advertisement statutes, in cases in which the mortgagee had transferred a beneficial interest, but retained record title, the court has unanimously held that "[o]nly the record holder of the mortgage has the power to foreclose; the validity of the foreclosure is not affected by any unrecorded assignment of interest held for security." The court could discern no indication that when the Legislature amended MCL 600.3204(1), it meant to establish a new legal framework in which an undisputed record holder of a mortgage, such as MERS, no longer possessed the statutory authority to foreclose.
Full Text Opinion