Federal Court in Michigan Declines to Reconsider MERS-Related Foreclosures

Federal Court in Michigan Declines to Reconsider MERS-Related Foreclosures

Reston, VA – June 17, 2011 – (RealEstateRama) — A pair of decisions from the U.S. District Court in the Eastern District of Michigan Southern Division declined to reconsider MERS-related foreclosures.

On June 10, Judge Marianne O. Battani denied the plaintiff’s motion to reconsider their foreclosure in Knox v. Trott, deciding that the Michigan Court of Appeals decision in Residential Funding v. Saurman/Bank of New York Trust v. Messner does not apply.

According to Judge Battani, Residential Funding dealt with a narrow issue—whether Mortgage Electronic Registration Systems, Inc. (MERS) could foreclose by advertisement or whether it must use judicial process. “Here, MERS was not the foreclosing party,” wrote the judge. “Plaintiff asks the Court to use the state appellate decision as a springboard for holding a MERS mortgage is void at its inception. This the Court declines to do.” Judge Battani further added that “the appellate panel noted that MERS could assign its security interest before foreclosure, which is what happened in this case.”

In a separate case decided on June 1, Judge John Corbett O’Meara also declined to reopen a case involving a MERS-related foreclosure. In Chahine v. First Magnus, the plaintiffs also attempted to invoke the ruling in Residential Funding and alleged that MERS improperly foreclosed on their mortgage. In denying the plaintiffs’ motion for a new trial, the court determined that while “[p]laintiffs have identified a change in the case law, which, in itself, does not provide a basis for relief… Plaintiffs have not identified other facts and circumstances that weigh against the important policy interest in the finality of judgments.”

“These decisions point to the limited applicability of the ruling in Residential Funding,” said Janis Smith, MERSCORP Vice President of Corporate Communications. “The Court of Appeals in the Residential Funding Case found that MERS is a legally valid mortgagee holding an enforceable mortgage lien, and that decision does not mean that courts will automatically overturn completed foreclosure cases.”

Janis L. Smith
Vice President, Corporate Communications

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