Opinion Date: 01/12/2012
Issues: Mortgage foreclosure; The Foreclosure-By-Advertisement Statute (MCL 600.2301 et seq.); Whether the defendant was required to record its mortgage interest "prior to" the sheriff's sale; Applicability of MCL 600.3204(3); Dohm v. Haskin; Davenport v. HSBC Bank USA; OAG 2004 No. 7147; Danse Corp. v. City of Madison Heights; Whether defendant acquired its interest in the mortgage by operation of law when it purchased a failed bank's loans from the Federal Deposit Insurance Corporation (FDIC); 12 USC § 1821(d)(2)(A)(i) & (ii); § 1821(d)(2)(G); Statutory interpretation; Detroit v. Detroit Plaza Ltd. P'ship; Ameritech Publ'g, Inc. v. Department of Treasury; Michigan Dep't of Transp. v. Tomkins; In re Wayne Cnty. Prosecutor
Court: Michigan Court of Appeals (Published)
Case Name: Kim v. JP Morgan Chase Bank
e-Journal Number: 50629
Judge(s): Donofrio, Stephens, and Ronayne Krause
The court held that pursuant to the plain language of MCL 600.3204(3), the defendant was required to record its mortgage interest before the sheriff's sale. Since it failed to do so, it was not statutorily authorized to proceed with the sale. Thus, the trial court erred in granting defendant summary disposition and in denying the plaintiffs-homeowners' summary disposition motion in this mortgage foreclosure dispute. Plaintiffs obtained a loan from a bank in 2007 to refinance their home. As security for the loan, they granted the bank a mortgage interest in the property, which the bank recorded. A year later, the Office of Thrift Supervision closed the bank and appointed the FDIC as receiver. Pursuant to a Purchase and Assumption Agreement between the FDIC and defendant, defendant acquired all of the bank's loans and loan commitments. "When plaintiffs defaulted on their loan payments, defendant sought to foreclose by advertisement." Defendant purchased the property at a sheriff's sale. Plaintiffs sued, seeking, inter alia, to set aside the sheriff's sale. They argued that defendant failed to satisfy the statutory requisites to foreclose by advertisement because it failed to record its mortgage interest before the sheriff's sale. Relying on OAG 2004 No. 7147, the trial court concluded that defendant was not required to record its interest before the sale because it acquired its interest by operation of law. However, the court held that because defendant was not the original mortgagee and acquired its interest in the mortgage by assignment, MCL 600.3204(3) required it to record its interest "prior to" the date of the sheriff's sale. Since the Attorney General opinion in OAG 2004 No. 7147 "did not comport with the current plain statutory language at issue, the trial court's reliance on the opinion was misplaced." The court noted that the "reliance was also misplaced because Attorney General opinions are not binding on" the court. Further, the Attorney General was addressing a prior version of the foreclosure by advertisement statute. The court also concluded that it did "not appear that defendant acquired its interest by operation of law." Reading the Purchase and Assumption Agreement together with the relevant federal statutory provisions, it appeared "that the FDIC, as receiver, rather than defendant, acquired the Bank's rights, titles, powers and privileges 'by operation of law.' Defendant simply purchased the loans from the FDIC after they were transferred to the FDIC by operation of law." Reversed and remanded.
Full Text Opinion