Michigan Court of Appeals Dismisses Wrongful Foreclosure Complaint Against MERS

MERSCORP Holdings Inc. has announced that a three-judge panel of the Michigan Court of Appeals recently affirmed a lower court decision in favor Mortgage Electronic Registration Systems, Inc. (MERS) and three other defendants, dismissing a five-count wrongful foreclosure complaint. In Mitchell v. PHH Mortgage Corp., Judges Jane M. Beckering, Kirsten F. Kelley and Joel P. Hoekstra, citing Michigan Compiled Law §600.3201(1), concluded “that the foreclosure in this case satisfied the [four-part] requirements …” of the law. Their ruling noted that the foreclosing lender, PHH, could indeed foreclose because MERS satisfies the Michigan statutory requirement of having “an interest in the indebtedness secured by the mortgage or the servicing agent of the mortgage,” and, because it was MERS’ assignee, PHH also satisfied the requirements. “Pursuant to our Supreme Court’s decision in Residential Funding Co. v. Saurman … PHH’s ‘ownership of legal title to a security lien whose existence is wholly contingent on the satisfaction of the indebtedness’ is an interest in the indebtedness secured by the mortgage,” they wrote. “Therefore, PHH was authorized to foreclose.” The panel rejected other arguments that the foreclosure was invalid when, citing Michigan foreclosure statutes, they held that a record chain of title existed prior to the foreclosure because MERS recorded its assignment to PHH several months before the sheriff’s sale. “It should be no surprise that the Michigan Court of Appeals affirmed the lower court decision in MERS’ favor,” said MERSCORP Holdings’ Director for Corporate Communications Jason Lobo. “The judges themselves cited established Michigan Supreme Court case law validating MERS’ role and authority.”