Opinion Date: 06/06/2013
Issues: Whether defendants had standing to foreclose by advertisement under MCL 600.3204(3); "Chain of title" defined; Kim v. JPMorgan Chase Bank, N.A; Purchase and Assumption Agreement (PAA); Bank of America (BOA)
Court: Michigan Court of Appeals (Unpublished)
Case Name: Sobh v. Bank of Am., NA
e-Journal Number: 54786
Judge(s): Per Curiam – Wilder, Stephens, and Ronayne Krause
The court held that as in Kim, because defendants lacked standing to foreclose, their foreclosure was voidable, but not void ab initio. Thus, the court reversed the trial court's order granting summary disposition to defendants and dismissing the plaintiffs' claims in this mortgage foreclosure action, and remanded. In 4/06, plaintiffs borrowed approximately $510,000 from WM Bank, and in exchange, granted WM a mortgage interest in the property. In 2008, WM went into receivership, with the FDIC appointed as receiver. Defendant-Chase acquired all of WM's assets, including plaintiffs' mortgage, on 9/25/08, via a voluntary PAA. There was no indication in the trial court record that Chase recorded its interest in the mortgage after it was conveyed by WM. In 3/10, Chase assigned its interest in the mortgage to defendant-BOA. Plaintiffs stopped making payments on their mortgage in late 2009, and in early 2011, BOA initiated foreclosure by advertisement proceedings. Plaintiffs sued to stop the foreclosure, alleging a variety of statutory and common law causes of action. The court held that the same result as in Kim was warranted here. There was no indication in the trial court record that Chase, after acquiring plaintiffs' mortgage via the same PAA at issue in Kim, ever recorded its assignment before assigning the mortgage to BOA. Chase's failure to comply with MCL 600.3204(3) before assigning its interest to BOA resulted in a break in the chain of title because Chase never recorded its assignment from WM before assigning it to BOA. Thus, "the plain requirement of MCL 600.3204(3) was not met here because 'a record chain of title' did not 'exist prior to the date of sale.'" Defendants argued that MCL 3204(3) "does not require that all interim assignments be recorded . . . rather . . . all that is required is that the party foreclosing the mortgage record the assignment to it prior to the date of sale. Nowhere does the current statute require the recording of any interim assignments that may have been made between the date the initial mortgage was given and the date the last assignment was recorded prior to sale." The court held that their argument was meritless. They failed to cite a single source in their appellate brief to support their contention that under MCL 600.3204(3), interim assignments such as the one from WM to Chase need not be recorded so long as the foreclosing entity recorded the assignment by which it acquired the mortgage. Further, Kim squarely addressed this issue and held that, under MCL 600.3204(3), "a mortgagee cannot validly foreclose a mortgage by advertisement before the mortgage and all assignments of that mortgage are duly recorded." Thus, defendants were "incorrect that MCL 600.3204(3) does not require that interim assignments be recorded - it does." The court held that the trial court erred when it concluded that BOA received a valid assignment from Chase - Chase's failure to comply with the statute resulted in a break in the chain of title and thus, BOA did not have standing to foreclose on plaintiffs' property under MCL 600.3204(3).
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